On January 1, Marshall Inc. purchased equipment for $1,000,000 that was to be used in various toxic chemical processes. The asset has a useful life of 20 years. Additionally, Marshall estimates that it will cost $ 100,000 to remove the asset and restore the site to a suitable use. Based on Marshall's 10% discount rate, the present value of these future restoration costs at the time the equipment is purchased is $14,864. Required: Prepare the entry to record the acquisition of the asset. Prepare the entry to record the acquisition of the asset on January 1. General Journal Instructions DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Jan. 1 Equipment Cash Asset Retirement Obligation

On January 1, Marshall Inc. purchased equipment for $1,000,000 that was to be used in various toxic chemical processes. The asset has a useful life of 20 years. Additionally, Marshall estimates that it will cost $ 100,000 to remove the asset and restore the site to a suitable use. Based on Marshall's 10% discount rate, the present value of these future restoration costs at the time the equipment is purchased is $14,864. Required: Prepare the entry to record the acquisition of the asset. Prepare the entry to record the acquisition of the asset on January 1. General Journal Instructions DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Jan. 1 Equipment Cash Asset Retirement Obligation

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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