Raycroft operates a nuclear power station. The power station is due to be decommissioned on 31 December 20X8 but will be fully operational up to that date. It has been estimated that the cost of decommissioning the power station and cleaning up any environmental damage, as required by legislation, will be $60 million. Raycroft recognised a provision for the present value of this expenditure at 31 December 20X0. A suitable discount rate for evaluating costs of this nature is 12%, equivalent to a present value factor after eight years of 0.404. The decommissioning cost will be depreciated over eight years. What is the total charge to profit or loss in respect of this provision for the year ended 31 December 20X1? $2,880,800 $3,030,000 $5,938,800 $7,500,000
Raycroft operates a nuclear power station. The power station is due to be decommissioned on
31 December 20X8 but will be fully operational up to that date. It has been estimated that the cost of
decommissioning the power station and cleaning up any environmental damage, as required by legislation,
will be $60 million. Raycroft recognised a provision for the present value of this expenditure at 31 December
20X0. A suitable discount rate for evaluating costs of this nature is 12%, equivalent to a present value factor
after eight years of 0.404. The decommissioning cost will be
What is the total charge to profit or loss in respect of this provision for the year ended 31 December 20X1?
$2,880,800
$3,030,000
$5,938,800
$7,500,000
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