Recycle Exploration Is Involved with Innovative Approaches to Finding Energy

Multiple Choice

Recycle Exploration is involved with innovative approaches to finding energy reserves.Recycle recently built a facility to extract natural gas at a cost of $15 million.However, Recycle is also legally responsible to remove the facility at the end of its useful life of twenty years.This cost is estimated to be $21 million (the present value of which is $8 million) .What is the journal entry required to record the environmental liability?

A) No journal entry required.
B) Debit Natural Gas Facility for $21,000,000 and credit Environmental Liability for $21,000,000
C) Debit Natural Gas Facility for $6,000,000 and credit Environmental Liability for $6,000,000.
D) Debit Natural Gas Facility for $8,000,000 and credit Environmental Liability for $8,000,000.