Sahel Co., a publicly traded entity, just completed the construction of an asset on January 1, 2021, at a total cost of $60,000,000. Legal fees during the construction were $50,000. The expected useful life of the asset is 50 years after which it will have to be decommissioned (dismantled) at an expected cost of $10,000,000. The relevant discount rate is 4%. Sahel uses the straight line method of depreciation. a. Prepare all journal entries related to the asset for the years 2021 and 2022. b. During 2028, the estimate to decommission the asset changes and is now estimated to be $20,000,000. In addition, the estimate of the discount rate has increased to 5%. Prepare all the journal entries in 2028.

Sahel Co., a publicly traded entity, just completed the construction of an asset on January 1, 2021, at a total cost of $60,000,000. Legal fees during the construction were $50,000. The expected useful life of the asset is 50 years after which it will have to be decommissioned (dismantled) at an expected cost of $10,000,000. The relevant discount rate is 4%. Sahel uses the straight line method of depreciation. a. Prepare all journal entries related to the asset for the years 2021 and 2022. b. During 2028, the estimate to decommission the asset changes and is now estimated to be $20,000,000. In addition, the estimate of the discount rate has increased to 5%. Prepare all the journal entries in 2028.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 43E

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