Bridgeport Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $12 million. Bridgeport is legally required to dismantle and remove the platform at the end of its 8 year useful life. Bridgeport estimates that it will cost $1.2 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 7%. Assume that the increase in the asset retirement obligation in 2023 related to the production of oil in 2023 was $67,639. (a) Your answer is partially correct. Prepare any necessary entry to record the increase in the asset retirement obligation at December 31, 2023, assuming that Bridgeport follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Asset Retirement Obligation Debit 67639 Credit 67639
Bridgeport Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $12 million. Bridgeport is legally required to dismantle and remove the platform at the end of its 8 year useful life. Bridgeport estimates that it will cost $1.2 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 7%. Assume that the increase in the asset retirement obligation in 2023 related to the production of oil in 2023 was $67,639. (a) Your answer is partially correct. Prepare any necessary entry to record the increase in the asset retirement obligation at December 31, 2023, assuming that Bridgeport follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Asset Retirement Obligation Debit 67639 Credit 67639
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Bridgeport Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $12 million. Bridgeport is
legally required to dismantle and remove the platform at the end of its 8 year useful life. Bridgeport estimates that it will cost $1.2
million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 7%. Assume that
the increase in the asset retirement obligation in 2023 related to the production of oil in 2023 was $67,639.
(a)
Your answer is partially correct.
Prepare any necessary entry to record the increase in the asset retirement obligation at December 31, 2023, assuming that
Bridgeport follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent
manually. List debit entry before credit entry. If no entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
Account Titles and Explanation
Asset Retirement Obligation
Debit
67639
Credit
67639
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