Gunk Co. reported an asset retirement obligation on its 2019 financial statements. The present value of the liability for the as

Question

3 years ago

8

Gunk Co. reported an asset retirement obligation on its 2019 financial statements. The present value of the liability for the as

set retirement obligation at the end of 2019 was $393. The company's discount rate is 8%. What is the amount of accretion expense Gunk will record in 2020 related to the asset retirement obligation

Business

1 answer:

iVinArrow [24] · Answer 1 · 2022-09-09T11:51:44+03:00

Answer:

$31.44

Explanation:

The accretion expense each year will be calculated as = Present value of the Asset retirement obligation at the end of the previous year * Discount Rate

Hence, the amount of accretion expense Gunk will record in 2020 related to the asset retirement obligation

= $393 * 8%

= $31.44