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On January 1 of the current year,Mooney Oil invested $8,000,000 to construct an offshore oil platform, and paid cash. As part of its offshore drilling agreement, Mooney is responsible for dismantling and removing the platform at the end of its 15-year useful life. Mooney depreciates the platform by using the straight-line method with no residual value expected at the end of its useful life. The estimated values are as follows:

Estimated Future Cash Flows Probability of Occurrence

$580,000 65%

$780,000 33%

$1,020,000 2%

The company's estimated cost of capital is 7%

Requirement a. Prepare the journal entries required to record the investment in the offshore oil platform.

Requirement b. Prepare the journal entry to record the first year’s depreciation and accretion accrual.

Requirement c. Prepare the journal entries required to record the disposal o the asset and the settlement of the asset retirement obligation at the end of the 8th year. After acquisition. Mooney sold the asset for $980000 and the costs of dismanting & removing the offshore oil platform totaled $ 1,200,000. (Please give the steps for requirement c because it will be different numbers than what I provided). Thanks.

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Casey Durgan
Casey DurganLv2
28 Sep 2019

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urnal entries of that case ?

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