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On January 1, Marshall Inc. purchased equipment for $1,000,000 that was to be used in...

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Accounting

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 Marshalls 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

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