Interest on Asset Retirement Obligation

Interest on Asset Retirement Obligation Questions

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Interest on Asset Retirement Obligation Questions

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questions

Concord Company purchases an oil tanker depot on January 1, 2020, at a cost of $652,100. Concord expects to operate the depot for 10 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 $72,300 to dismantle the depot and remove the tanks at the end of the depot’s useful life.

Prepare the journal entries to record the depot and the asset retirement obligation for the depot on January 1, 2020. Based on an effective-interest rate of 6%, the present value of the asset retirement obligation on January 1, 2020, is $40,372.

Prepare any journal entries required for the depot and the asset retirement obligation at December 31, 2020. Concord uses straight-line depreciation; the estimated salvage value for the depot is zero.

On December 31, 2029, Concord pays a demolition firm to dismantle the depot and remove the tanks at a price of $80,920. Prepare the journal entry for the settlement of the asset retirement obligation.

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Cost Function and Cost Volume Profit Analysis Discussion

Q1. Analyze some examples of relevant and irrelevant Cash Flows for one Saudi Company?

Q 2 a – Discuss why managers estimate a cost function and use Cost volume Profit analysis? Give numerical example of cost function and Cost Volume Profit Analysis and analyze how it will be used by managers?

b- Suppose actual costs are higher than estimated cost. Analyze why you may have this difference between actual and estimated costs?

Q 3 AL Tawfik Corporation is estimating the cost function for total cost of production of product A using the two points method. The data collected for the past year is as following:

Number of units Total

Quarter produced Costs

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14,000$1,000

25,4001,280

37,0001,600

49,0002,000

Using the two points methods, choose two points with which you estimate the cost function.

Q 4 Give one example of Saudi companies using job costing and one example of Saudi companies using process costing and discuss the difference between them?

Interest on Asset Retirement Obligation Questions

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