Vaughn's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a cost of $9,270,000. Vaughn estimates it will cost $912,000 to dismantle and remove the platform at the end of its useful life in 10 years, which the company is legally required to do. (The fair value at January 1, 2025, of the dismantle and removal costs is $320,000.) Prepare the entry to record the asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry) Account Titles and Explanation Debit Credit
Vaughn's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a cost of $9,270,000. Vaughn estimates it will cost $912,000 to dismantle and remove the platform at the end of its useful life in 10 years, which the company is legally required to do. (The fair value at January 1, 2025, of the dismantle and removal costs is $320,000.) Prepare the entry to record the asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry) Account Titles and Explanation Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Vaughn's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a cost of $9,270,000. Vaughn estimates
it will cost $912,000 to dismantle and remove the platform at the end of its useful life in 10 years, which the company is legally
required to do. (The fair value at January 1, 2025, of the dismantle and removal costs is $320,000.) Prepare the entry to record the
asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry)
Account Titles and Explanation
Debit
Credit
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