Swifty Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $8 million. Swifty is legally required to dismantle and remove the platform at the end of its nine-year useful life. Swifty estimates that it will cost $0.8 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 9%. Using (a) factor Table A.2. (b) a financial calculator, or (c) Excel function PV. Ignore production related costs for this question.
Swifty Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $8 million. Swifty is legally required to dismantle and remove the platform at the end of its nine-year useful life. Swifty estimates that it will cost $0.8 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 9%. Using (a) factor Table A.2. (b) a financial calculator, or (c) Excel function PV. Ignore production related costs for this question.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
D1.
Transcribed Image Text:Account Titles and Explanation
(To record depreciation expense)
(To record interest expense)
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Debit
Credit
Transcribed Image Text:Swifty Corp. erected and placed into service an offshore oil platform on January 1, 2023, at a cost of $8 million. Swifty is legally
required to dismantle and remove the platform at the end of its nine-year useful life. Swifty estimates that it will cost $0.8 million to
dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 9%. 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)
$368,344
Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at
December 31, 2023, assuming that Swifty follows IFRS. (Round answers to O 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 o for the amounts.)
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