On January 1, 2019, a company completed construction of a nuclear power plant. The total cost of the facility was $7,200,000 and had a 22-year useful life. At the end of the facility's useful life, the plant has to be decommissioned at an expected cost of $2,750,000. The relevant discount rate is 5%. The company uses the straight-line method to depreciate its property plant and equipment. Required In 2037, due to advances in technology, management estimates that the cost to decommission the plant will only be $750,000. Write the journal entry at the beginning of 2037 to reflect this change. Assume that the discount rate has changed to 7%.
On January 1, 2019, a company completed construction of a nuclear power plant. The total cost of the facility was $7,200,000 and had a 22-year useful life. At the end of the facility's useful life, the plant has to be decommissioned at an expected cost of $2,750,000. The relevant discount rate is 5%. The company uses the straight-line method to depreciate its property plant and equipment. Required In 2037, due to advances in technology, management estimates that the cost to decommission the plant will only be $750,000. Write the journal entry at the beginning of 2037 to reflect this change. Assume that the discount rate has changed to 7%.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 10E: Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual...
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On January 1, 2019, a company completed construction of a nuclear power plant. The total cost of the facility was $7,200,000 and had a 22-year useful life.
At the end of the facility's useful life, the plant has to be decommissioned at an expected cost of $2,750,000. The relevant discount rate is 5%.
The company uses the straight-line method to depreciate its property plant and equipment.
Required
In 2037, due to advances in technology, management estimates that the cost to decommission the plant will only be $750,000.
Write the journal entry at the beginning of 2037 to reflect this change. Assume that the discount rate has changed to 7%.
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