a. Prepare the journal entries required to record the acquisition of the plant asset. b. Prepare the journal entry to record the first year’s depreciation and accretion accrual. c. Prepare the journal entries required to record the disposal of the asset and the settlement of the asset retirement obligation at the end of the fifth year after acquisition. Evergreen sold the asset for $ 17,000,000 and the costs of dismantling the plant and restoring the property totaled $ 5,400,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, Evergreen Utilities Company acquired a power plant at a total cost of $ 23,500,000,...
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On January 1, Evergreen Utilities Company acquired a power plant at a total cost of $ 23,500,000, and paid cash. The estimated cost ( in today’s market) to dismantle the plant and restore the property at the end of the plant’s 20- year life is $ 4,850,000. Evergreen’s cost of capital is 8%. Evergreen will depreciate the asset over its useful life using the straight- line method. The asset has no residual value. Required a. Prepare the journal entries required to record the acquisition of the plant asset. b. Prepare the journal entry to record the first year’s depreciation and accretion accrual. c. Prepare the journal entries required to record the disposal of the asset and the settlement of the asset retirement obligation at the end of the fifth year after acquisition. Evergreen sold the asset for $ 17,000,000 and the costs of dismantling the plant and restoring the property totaled $ 5,400,000. View Solution:
On January 1 Evergreen Utilities Company acquired a power plant

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