Provide answer in detail. Monty Corp. erected and placed into service an offshor

Question

Provide answer in detail.

Monty Corp. erected and placed into service an offshore oil platform on January 1, 2017 at a cost of $9 million. Monty is legally required to dismantle and remove the platform at the end of its 8 year useful life. Monty estimates that it will cost $0.9 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 9%. Ignore production related costs for this question. (a) Your answer is partially correct. Try again. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2017, assuming that Monty follows IFRS. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Depreciation Expense Accumulated Depreciation Drilling Platform (To record depreciation expense) Interest Expense Asset Retirement Obligation (To adjust asset retirement obligation)

Explanation / Answer

Dismantling cost = $0.9 million * .502 = $ .4518

Journal

Finance expense Dr.$0.0407

To provision for dismantling $ 0.0407

($.4518*9)

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