On January ?1, Staley Utilities Company acquired a power plant at a total cost of $23,580,000?,...

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Accounting

On January ?1, Staley Utilities Company acquired a power plantat a total cost of $23,580,000?, and paid cash. The estimated cost?(in today's? market) to dismantle the plant and restore theproperty at the end of the? plant's 15?-year life is $4,859,000Staley's cost of capital is 2. Staley will depreciate the assetover its useful life using the? straight-line method. The asset hasno residual value.
Requirements:
a.
Prepare the journal entries required to record the acquisitionof the plant asset.
b.
Prepare the journal entry to record the first? year'sdepreciation and accretion accrual. Now journalize the first?year's accretion accrual.
c.
Prepare the journal entries required to record the disposal ofthe asset and the settlement of the asset retirement obligation atthe end of the fifth year after acquisition. Staley sold the assetfor $16,007,000 and the costs of dismantling the plant andrestoring the property totaled $5,420,000. Begin by journalizingthe disposal of the asset at the end of the fifth year afteracquisition. Now journalize the settlement of the asset retirementobligation at the end of the fifth year after acquisition.

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a Journal entry to record the acquisition of the plant asset Date Account title Debit Credit 1Jan Power Plant 23580000 Cash 23580000 b Journal entry to record first years depreciation Date Account title Debit Credit 31Dec Depreciation expense 1572000 Accumulated depreciationPower palnt 1572000 Cost of Power plant 23580000 Useful life 15 Depreciation each See Answer

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On January ?1, Staley Utilities Company acquired a power plantat a total cost of $23,580,000?, and paid cash. The estimated cost?(in today's? market) to dismantle the plant and restore theproperty at the end of the? plant's 15?-year life is $4,859,000Staley's cost of capital is 2. Staley will depreciate the assetover its useful life using the? straight-line method. The asset hasno residual value.Requirements:a.Prepare the journal entries required to record the acquisitionof the plant asset.b.Prepare the journal entry to record the first? year'sdepreciation and accretion accrual. Now journalize the first?year's accretion accrual.c.Prepare the journal entries required to record the disposal ofthe asset and the settlement of the asset retirement obligation atthe end of the fifth year after acquisition. Staley sold the assetfor $16,007,000 and the costs of dismantling the plant andrestoring the property totaled $5,420,000. Begin by journalizingthe disposal of the asset at the end of the fifth year afteracquisition. Now journalize the settlement of the asset retirementobligation at the end of the fifth year after acquisition.

a.	Prepare the journal entries required to record the acquisitionof the plant asset.
b.	Prepare the journal entry to record the first? year'sdepreciation and accretion accrual. Now journalize the first?year's accretion accrual.
c.	Prepare the journal entries required to record the disposal ofthe asset and the settlement of the asset retirement obligation atthe end of the fifth year after acquisition. Staley sold the assetfor $16,007,000 and the costs of dismantling the plant andrestoring the property totaled $5,420,000. Begin by journalizingthe disposal of the asset at the end of the fifth year afteracquisition. Now journalize the settlement of the asset retirementobligation at the end of the fifth year after acquisition.