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 Marshall's 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

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 Marshall's 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

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 6RE

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