A company buys a Platform for $800,000 on January 1, 2019. The life of the rig is 10 years and the expected cost to dismantle the platform at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What journal entry related to environmental liability should be recorded on January 1, 2019, as a result of these events? A. Debit Environmental Expense for $200,000 and credit Environmental Liability for $200,000 B. Debit Environmental Loss for $200,000 and credit Environmental Liability for $200,000. OC. Debit Platform for $200,000 and credit Environmental Liability for $200,000. O D. Debit Platform for $77,110 and credit Environmental Liability for $77.110.
A company buys a Platform for $800,000 on January 1, 2019. The life of the rig is 10 years and the expected cost to dismantle the platform at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What journal entry related to environmental liability should be recorded on January 1, 2019, as a result of these events? A. Debit Environmental Expense for $200,000 and credit Environmental Liability for $200,000 B. Debit Environmental Loss for $200,000 and credit Environmental Liability for $200,000. OC. Debit Platform for $200,000 and credit Environmental Liability for $200,000. O D. Debit Platform for $77,110 and credit Environmental Liability for $77.110.
Chapter1: Financial Statements And Business Decisions
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Depreciation Accounting
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Transcribed Image Text:A company buys a Platform for $800,000 on January 1, 2019. The life of the rig is 10 years and the expected cost to dismantle the
platform at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this
company. What journal entry related to environmental liability should be recorded on January 1, 2019, as a result of these events?
A. Debit Environmental Expense for $200,000 and credit Environmental Liability for $200,000.
B. Debit Environmental Loss for $200,000 and credit Environmental Liability for $200,000.
OC. Debit Platform for $200,000 and credit Environmental Liability for $200,000.
D. Debit Platform for $77,110 and credit Environmental Liability for $77.110.
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