A company buys an oil rig for $2,700,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $575,000 (present value discounted at 10% (fair rate for this company) is $221,687). What is the total amount of expense that should be recorded in the financial statements for 2020 as a result of these events (hint: consider both depreciation of the oil rig and any interest on the asset retirement obligation). There is no estimated salvage value for the oil rig and the company uses straight-line depreciation. Round all intermediate calculations to whole dollars. O $346,266 O $314,338 O $292,169 O $22,169 O $327,500

A company buys an oil rig for $2,700,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $575,000 (present value discounted at 10% (fair rate for this company) is $221,687). What is the total amount of expense that should be recorded in the financial statements for 2020 as a result of these events (hint: consider both depreciation of the oil rig and any interest on the asset retirement obligation). There is no estimated salvage value for the oil rig and the company uses straight-line depreciation. Round all intermediate calculations to whole dollars. O $346,266 O $314,338 O $292,169 O $22,169 O $327,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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