Asset Retirement Obligations 5. A company buys an oil rig for $1,900,000 on January 1,...
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Asset Retirement Obligations 5. A company buys an oil rig for $1,900,000 on January 1, Year 10. The life of the rig is 20 years and the expected cost to dismantle and clean up the area surrounding the rig at the end of that time is $285,000 (present value at 10% is $42,363). Make the journal entry to record the obligation. Using only the information provided in the previous question, what, if any, expenses should the company record for Year 10 as a result of buying the new oil rig? 6. Page 3
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