Question

Flounder Corp. erected and placed into service an offshore oil platform on January 1, 2020, at a cost of $12 million. Flounder is legally required to dismantle and remove the platform at the end of its 10-year useful life. Flounder estimates that it will cost $1 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 9%. Use (a) factor Table A.2, (b) a financial calculator, or (c) Excel function PV. Ignore production related costs for this question.

Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2020, assuming that Flounder follows IFRS. Ignore production-related costs. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2020, assuming that Flounder follows ASPE. Ignore production-related costs. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)