Blue Spruce Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $11 million. Blue Spruce is legally required to dismantle and remove the platform at the end of its seven-year useful life. Blue Spruce estimates that it will cost $1.1 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 8%. Using (a) factor Table A.2, (b) a financial calculator, or (c) Excel function PV. Ignore production related costs for this question. Asset Retirement Obligation (a) Your answer is partially correct. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2023, assuming that Blue Spruce follows IFRS. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Depreciation Expense $641,839 Accumulated Depreciation - Drilling Platform (To record depreciation expense) Interest Expense Asset Retirement Obligation (To record interest expense) Debit 51347 Credit TUDO 51347
Blue Spruce Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $11 million. Blue Spruce is legally required to dismantle and remove the platform at the end of its seven-year useful life. Blue Spruce estimates that it will cost $1.1 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 8%. Using (a) factor Table A.2, (b) a financial calculator, or (c) Excel function PV. Ignore production related costs for this question. Asset Retirement Obligation (a) Your answer is partially correct. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2023, assuming that Blue Spruce follows IFRS. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Depreciation Expense $641,839 Accumulated Depreciation - Drilling Platform (To record depreciation expense) Interest Expense Asset Retirement Obligation (To record interest expense) Debit 51347 Credit TUDO 51347
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blue Spruce Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $11 million. Blue Spruce is
legally required to dismantle and remove the platform at the end of its seven-year useful life. Blue Spruce estimates that it will cost
$1.1 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 8%. Using (a)
factor Table A.2, (b) a financial calculator, or (c) Excel function PV. Ignore production related costs for this question.
Asset Retirement Obligation
(a)
Your answer is partially correct.
Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at
December 31, 2023, assuming that Blue Spruce follows IFRS. (Round answers to 0 decimal places, e.g. 5,275. Credit
account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries
before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Depreciation Expense
$641,839
Accumulated Depreciation - Drilling Platform
(To record depreciation expense)
Interest Expense
Asset Retirement Obligation
(To record interest expense)
Debit
51347
Credit
III
51347
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