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4. American Co. operates an offshore oilfield where its licensing agreement requires it to remove...

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Accounting

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4. American Co. operates an offshore oilfield where its licensing agreement requires it to remove the oil rig at the end of production and restore the seabed. Eighty percent of the eventual costs relate to the removal of the oil rig and restoration of the damages caused by building it, and twenty percent arise from the extraction of oil. By December 31, 20xi , the rig has been constructed but no oil has been extracted. American Co. estimates that the total cost of decommissioning the equipment and restoring the site is P100M. What amount of provision should American Co. recognize on December 31, 20x1? a. 100M b. 90M C. 80M d.o

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