Blossom's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a cost of $8,160,000. Blossomestimates it will cost $1,007,000 to dismantle and remove the platform at the end of its useful life in 10 years, which the company islegally required to do. (The fair value at January 1, 2025, of the dismantle and removal costs is $430,000.) Prepare the entry to recordthe asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List debit entry beforecredit entry.)Account Titles and ExplanationDebitCredit

Approach to solving the question: In the solution below, I have used the exact same format for the…

Answered: Blossom's Drillers erects and places…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. • The equipment cost Ghosh $956,600 and has an expected useful life of five years. • Ghosh expects the residual value at December 31, 2027, will be $300,600. • Negotiations led to the lessee guaranteeing a $340,600 residual value. Equal payments under the finance/sales-type lease are $200,600 and are due on December 31 of each year with the first payment being made on December 31, 2024. • Karrier is aware that Ghosh used a 5% interest rate when calculating lease payments. Note: Use Excel, or a financial calculator. Required: 1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease. 2. Prepare all appropriate entries for both Karrier and Ghosh on December 31, 2024, related to the lease. Complete this question by entering your answers…
On June 5, 2023, Mabel Company purchased an oil well for $970,000. The well contains an estimated 87,000 barrels of oil, with an estimated residual value of zero. During July 2023, 21,000 barrels of oil were removed from the well and 17,000 barrels were sold later. What is the cost of oil sold for July? (Round intermediary calculations to the nearest cent and the final answer to the nearest dollar). A. $234,150. B. $87,000. C. $189,550. D. $970,000.
Bonita Mining Company purchased land on February 1, 2025, at a cost of $1,252,100. It estimated that a total of 57,000 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $108,900. It believes it will be able to sell the property afterwards for $121,000. It incurred developmental costs of $242,000 before it was able to do any mining. In 2025, resources removed totaled 28,500 tons. The company sold 20,900 tons. Compute the following information for 2025. a. b. C. Per unit mineral cost Total material cost of December 31, 2025, inventory Total material cost in cost of goods sold at December 31, 2025 $ $ /ton
On January 1, 2023, Blossom Ltd. acquires a building at a cost of $200,000. The building is expected to have a 20-year life and no residual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations are carried out every three years. On December 31, 2025, the fair value of the building is appraised at $175,000, and on December 31, 2028, its fair value is $120,000. Blossom applies IFRS. Prepare the journal entries required on December 31, 2025, and the journal entry required on December 31, 2028, to revalue the building, if Blossom uses the proportionate method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,275.) Date ec. 31, 2025 c. 31, 2028 V Account…
In August 2024, Carla Vista Helicopters Ltd. purchased a new helicopter for its logging and heavy lift operations at a cost of $1.05 million. Based on past experience, management has determined that the helicopter will have a useful life of 18,000 flying hours, at which time it will have an estimated residual value of $150,000. During 2024, the helicopter was used for 1,800 flying hours, and in 2025 it was used for 2,000 flying hours. Carla Vista Helicopters has a December 31 year end and uses the units-of-production method of depreciation for its helicopters. Determine the depreciation expense on this helicopter for 2025 and its carrying amount at December 31, 2025. Depreciation expense $ Carrying amount $ 2025
During 2024, Nash constructed a small manufacturing facility specifically to manufacture one particular accessory. Nash paid the construction contractor $5,279,000 cash (which was the total contract price) and placed the facility into service on January 1, 2025. Because of technological change, Nash anticipates that the manufacturing facility will be useful for no more than 10 years. The local government where the facility is located required that, at the end of the 10-year period, Nash remediate the facility so that it can be used as a community center. Nash estimates the cost of remediation will be $632,900. Nash uses straight-line depreciation with $0 salvage value for its plant asset and a 12% discount rate for asset retirement obligations. (a) Your answer is correct. Prepare the journal entries to record the January 1, 2025, transactions. Use the Plant Assets account for the tanker depot. (Credit account titles are automatically indented when the amount is entered. Do not indent…
Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has occurred, Crane must restore the property (estimated fair value of the obligation is $80,800), after which it can be sold for $161,600. Crane estimates that 4,040 tons of coal can be extracted.If 707 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
At the beginning of 2024, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,730,000. After the timber is cleared, the land will have a residual value of $760,000. Roads to enable logging operations were constructed and completed on March 30, 2024. The cost of the roads, which have no residual value and no alternative use after the tract is cleared, was $297,000. During 2024, Terra logged 660,000 of the estimated 6.6 million board feet of timber. Required: Calculate the 2024 depletion of the timber tract and depreciation of the logging roads, assuming the units-of-production method is used for both assets. Note: Do not round intermediate calculations. Enter values in whole dollars. Depletion of the timber tract Depreciation of the logging roads
On January 1, 2020, Brown Mining Enterprises purchased an existing coalmine. Brown expects to operate the mine for four years (i.e., until the end of 2023), after which it is legally required to dismantle the coalmine. Brown estimates that it will have to pay $500,000 to dismantle the mine and accomplish the other required asset retirement activities such as filling and restoring land etc. at the end of the mine’s life. The applicable general interest rate for Brown is 10% (considering its credit standing and the interest rates on its other borrowings). Prepare the journal entry to record the asset retirement obligation on January 1, 2020 and prepare the journal entries for depreciation and interest expense on december 31, 2020 2. Prepare journal entries for depreciation and interest expense on December 31, 2020.
Dinesh
Tamarisk Mining Company purchased land on February 1, 2020, at a cost of $ 914,300. It estimated that a total of 53,400 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $ 98,100. It believes it will be able to sell the property afterwards for $ 109,000. It incurred developmental costs of $ 218,000 before it was able to do any mining. In 2020, resources removed totaled 26,700 tons. The company sold 19,580 tons. Compute the following information for 2020. a) Per unit mineral cost $ (b) Total material cost of December 31, 2020, inventory $ (c) Total material cost in cost of goods sold at December 31, 2020 $
On January 4, 2015, a research project undertaken by Nasja Ltd. was completed and a patent was approved. The research phase of the project incurred costs of $150,000, and legal costs incurred to obtain the patent approval were $20,000. The patent is assessed to have a useful life to 2025, or for ten years. Early in 2016, Nasja successfully defended the patent against a competitor, incurring a legal cost of $22,000. This set a precedent for Nasja who was able to reassess the patent’s useful life to 2030. During 2017, Nasja was able to create a product design that was feasible for commercialization, but no more certainty was known at that time. Costs to get the product design to this stage were $250,000. Additional engineering and consulting fees of $50,000 were incurred to advance the design to the manufacturing stage. Nasja follows IFRS. Required: a. Prepare all the relevant journal entries for the project for 2015 to 2017, inclusive. b. What is the accounting treatment for the…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS