A company buys an oil rig for $2500000 on January 1, 2018. The life of the...
A company buys an oil rig for $2500000 on January 1, 2018. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $608000 (present value at 11% is $214130). 11% is an appropriate interest rate for this company. What expense should be recorded for 2018 as a result of these events?
Homework Answers
| Answer | ||
| depreciation expense | $ 271,413 | (2500000+214130)/10 |
| Interest Expense for disposal | $ 23,554 | 214130*11% |
| Expenses to be recorded for 2018 | $ 294,967 | |
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