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9966 [12]
2 years ago
6

Big Cat Exploration erected an oil platform in a remote area of Texas at a cost of $10 million. Bit Cat is legally required to d

ismantle and remove the platform at the end of its useful life, which is expected to be 10 years. Big Cat estimates that the cost of dismantling and removing the oil rig will be $700,000. Assume that the appropriate discount rate is 8%. Required: Prepare the journal entry to record the acquisition of the oil platform.
Business
1 answer:
Verizon [17]2 years ago
5 0

Answer:

The $700,000 is an expense that will be incurred in 10 years from now. It howveer, needs to be accounted for in the present to show cost.

With a discount rate of 8% and 10 years as the period, the PV is,

= 700,000 / ( 1 + r) ¹⁰

= 700,000 / 1.08 ¹⁰

= 324,235.441659

= $324,235

Journal Entry becomes.

DR Oil Platform $10,324,235

CR Cash $10,000,000

CR Asset Retirement Obligation $324,235

(To record Oil Platform Acquisition)

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When valuing a stock using the constant-growth model, d1 represents the?
Minchanka [31]

When valuing a stock using the constant-growth model, D1 represents the next expected annual dividend. The constant-growth model is formally known as the Gordon Growth Model. This model shows the intrinsic value of stock based on dividends in the future if they are growing at a constant rate. Instrinsic value is the value of something based on anaylsis without accounting for the market value.

3 0
2 years ago
When writing solicited application letters? __________.
eduard
C for me because i want to know more about my job 
7 0
3 years ago
What is the present value (PV) of $50,000 received eighteen years from now, assuming the interest rate is 4% per year
LuckyWell [14K]

Answer:

$24,681.41

Explanation:

In this question, we use the present value formula which is shown in the spreadsheet.  

The NPER reflected the time period.

Provided  that,  

Future value = $50,000

Rate of interest = 4%

NPER = 18 years

The formula is presented below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the answer would be $24,681.41

8 0
3 years ago
Negative externalities that arise from the production of a gooda. cause an increase in the demand for the goodb. cause a decreas
Dennis_Churaev [7]

Answer:

The correct answer is option c.

Explanation:

Externalities refers to the situation in which costs or benefits arising from the activities of someone are incurred or  received by the some other third party.

Externalities can be classified into two types, namely, positive and negative.

In case of negative externalities the cost arising from the activities of some person are incurred by a third party.

Negative externalities lead to market failure.

6 0
2 years ago
Tony is the owner of Tony’s Taqueria. Tony is a profit-maximizing owner whose firm operates in a competitive market. An addition
Lisa [10]

Answer:

(c) $5

Explanation:

Remember, To calculate marginal cost, we divide the change in production costs by the change in quantity.

In this example, the change in production cost is $200 (for hiring an additional worker) while the change in quantity of taco is 40 (increase in marginal productivity).

The marginal cost= $200/40

we get $5 as the marginal cost.

5 0
3 years ago
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