On January 1, Thermal Power Incorporated builds a nuclear plant 50 miles outside of Timmins, Ontario that it is legally required to dismantle and remove at the end of its 40-year useful life. The total cost of dismantling and removing the plant is estimated at $650,000,000. The discount rate is 12%. Which of the following entries would be used to record the interest liability relating to the asset retirement obligation at the end of year one using ASPE? (Round to the nearest whole number.) A. Dr. Interest expense $838,250 B. Dr. Accretion Expense $838,250 C. Dr. Asset Retirement Obligation $838,250 D. Dr. Interest Expense $1,950,000
On January 1, Thermal Power Incorporated builds a nuclear plant 50 miles outside of Timmins, Ontario that it is legally required to dismantle and remove at the end of its 40-year useful life. The total cost of dismantling and removing the plant is estimated at $650,000,000. The discount rate is 12%. Which of the following entries would be used to record the interest liability relating to the asset retirement obligation at the end of year one using ASPE? (Round to the nearest whole number.) A. Dr. Interest expense $838,250 B. Dr. Accretion Expense $838,250 C. Dr. Asset Retirement Obligation $838,250 D. Dr. Interest Expense $1,950,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, Thermal Power Incorporated builds a nuclear plant 50 miles outside of Timmins, Ontario that it is legally required to dismantle and remove at the end of its 40-year useful life. The total cost of dismantling and removing the plant is estimated at $650,000,000. The discount rate is 12%. Which of the following entries would be used to record the interest liability relating to the asset retirement obligation at the end of year one using ASPE? (Round to the nearest whole number.)
A. Dr. Interest expense $838,250
B. Dr. Accretion Expense $838,250
C. Dr. Asset Retirement Obligation $838,250
D. Dr. Interest Expense $1,950,000
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