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,...

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%.

Jun 09, 2022

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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,...

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