Connor Buck Company purchased an oil tanker on January 1, 2014, at a cost of $3,000,000 cash. Connor expects to operate the depot for 20 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $500,000 to dismantle the depot and remove the tanks at the end of the depot's useful life. Market Rate interest = 10 (a) Prepare the journal entries to record the depot (considered a plant asset) and the asset retirement obligation for the depot on January 1, 2014. Based on an effective-interest rate of 6%, the present value of the asset retirement obligation on January 1, 2014, is $35,458.
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