Recording Asset Retirement Obligation
BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of $ on January of the current year. The tanks useful life is estimated at years, at which time the company is legally required to remove the tank and restore the area at an estimated cost of $ The appropriate discount rate for the company is
Required
a On January record the entry for the purchase and installation of the storage tank and the related asset retirement obligation.
b Record adjusting entries on December of the current year for depreciation and accretion.
c Assume that on December fifteen years later, the tank is safely removed at a cost of $ Record the required journal entry.
Note: Round answers to the nearest whole dollar.
tableAccount Namea Jan. Equipment,
