Question

In: Accounting

on 1 July 2004,Experimentor opened a chemical reprocessing plant. the plant was due to be active...

on 1 July 2004,Experimentor opened a chemical reprocessing plant. the plant was due to be active for five years until 30 June 2009, when it would be decommissioned. At 1 July, 2004, the costs of decommissioning the plant were estimated to be $4million in 5 years time. the company considers that a discount rate of 12% is approprite for the calculation of a present value, and the discount factor at 12% for year 5 is 0.567.
what is the total charge to the statement of profit or loss(Depreciation and finncial charge) in respect of the decommissioning for the year ended 30 June 2015?

Solutions

Expert Solution

The present value of decommissioning provision of the plant using the discounting factor of 12% = 0.567*$4 million = $2.268 million. Therefore, the total charge to the statement of profit or loss in respect of the decommissioning for the year ended 30 June 2005 would be $0.72576 million (0.27216+0.4536)

Finance charge = 12%*2.268 = 0.27216

Depreciation = 2.268/5 = 0.4536

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

(b) On 1 July 2018, Maxwell Chemical Ltd acquired a plant at a cost of $1,000,000....
(b) On 1 July 2018, Maxwell Chemical Ltd acquired a plant at a cost of $1,000,000. Maxwell depreciated the assets on a straight line basis. As at 30 June 2020, the machinery had accumulated depreciation of $200,000 and an expected remaining useful life of four years. On 30 June 2020, Maxwell Chemical Ltd conducted an impairment test on asset. It was assessed that the plant could be sold to other entities for $600,000 with costs of disposal of $25,000. The...
On 1 July 2018, Maxwell Chemical Ltd acquired a plant at a cost of $1,000,000. Maxwell...
On 1 July 2018, Maxwell Chemical Ltd acquired a plant at a cost of $1,000,000. Maxwell depreciated the assets on a straight line basis. As at 30 June 2020, the machinery had accumulated depreciation of $200,000 and an expected remaining useful life of four years. On 30 June 2020, Maxwell Chemical Ltd conducted an impairment test on asset. It was assessed that the plant could be sold to other entities for $600,000 with costs of disposal of $25,000. The management...
A chemical plant is due for a major overhaul and the manager has to make an...
A chemical plant is due for a major overhaul and the manager has to make an assessment of a number of uncertainties associated with the project. These include the time the overhaul will take to complete (after 35 days the losses of production caused by the overhaul could have serious consequences for the company) and the risks that there will be leakage of dangerous chemicals into local watercourses during the cleaning process. The following extracts have been taken from the...
WXY Inc. declared a dividend on July 27, 2004 to be payable on September 10, 2004....
WXY Inc. declared a dividend on July 27, 2004 to be payable on September 10, 2004. The list of shareholders who would be entitled to this dividend would be prepared on August 10, 2004. a) Identify the key dates involved with dividend payment (4 points) b) If Tom bought some shares on August 7, 2004, would he have received the dividend declared for this period? If not, who would receive it? (3 points) c) You buy a share of stock...
ACCOUNTING CLOSING PROCESS Harry Harper LLC opened for business on July 1, 2017. During July the...
ACCOUNTING CLOSING PROCESS Harry Harper LLC opened for business on July 1, 2017. During July the following transactions were completed. July 1:                    Harry invested $18,000 cash in the business. July 1:                    Purchased used truck for $9,000, paying $2,000 cash and the balance on account. July 3:                    Purchased cleaning supplies for $1,800 on account. July 5:                    Paid $4,800 cash on two-year insurance policy effective July 1. July 12:                 Billed customers $1,500 for cleaning services. July 18:                ...
ACCOUNTING CLOSING PROCESS Harry Harper LLC opened for business on July 1, 2017. During July the...
ACCOUNTING CLOSING PROCESS Harry Harper LLC opened for business on July 1, 2017. During July the following transactions were completed. July 1:                    Harry invested $18,000 cash in the business. July 1:                    Purchased used truck for $9,000, paying $2,000 cash and the balance on account. July 3:                    Purchased cleaning supplies for $1,800 on account. July 5:                    Paid $4,800 cash on two-year insurance policy effective July 1. July 12:                 Billed customers $1,500 for cleaning services. July 18:                ...
On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was...
On 1 July 2020, Sherlock Ltd leased a processing plant to Holmes Ltd. The plant was purchased by Sherlock Ltd on 1 July 2020 for its fair value of $467 112. The lease agreement contained the following provisions: Holmes Ltd intends to return the processing plant to Sherlock Ltd at the end of the lease term. The lease has been classified as a finance lease by Sherlock Ltd. Required Prepare: (a) the lease payments schedule for Holmes Ltd (show all...
Crane Clark opened Crane’s Cleaning Service on July 1, 2020. During July, the following transactions were...
Crane Clark opened Crane’s Cleaning Service on July 1, 2020. During July, the following transactions were completed. July 1 Crane invested $19,900 cash in the business. 1 Purchased used truck for $8,800, paying $3,900 cash and the balance on account. 3 Purchased cleaning supplies for $2,000 on account. 5 Paid $1,800 cash on 1-year insurance policy effective July 1. 12 Billed customers $4,500 for cleaning services. 18 Paid $1,600 cash on amount owed on truck and $1,500 on amount owed...
Mike Greenberg opened Novak Window Washing Inc. on July 1, 2017. During July, the following transactions...
Mike Greenberg opened Novak Window Washing Inc. on July 1, 2017. During July, the following transactions were completed. 1-Jul Issued 11,300 shares of common stock for $11,300 cash. 1 Purchased used truck for $7,520, paying $1,880 cash and the balance on account. 3 Purchased cleaning supplies for $850 on account. 5 Paid $1,680 cash on a 1-year insurance policy effective July 1. 12 Billed customers $3,480 for cleaning services performed. 18 Paid $940 cash on amount owed on truck and...
Patrick opened Patrick’s Window Washing on July 1, 2019. During July the following transactions were completed:...
Patrick opened Patrick’s Window Washing on July 1, 2019. During July the following transactions were completed: July 1 Patrick invested $20,000 cash in exchange for stock of the business. 1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account. 3 Purchased cleaning supplies for $1,300 on account. 5 Paid $1,200 cash on one-year insurance policy effective July 1. 6 Purchased 20 bottles of window washing detergent from Coal Company for Patrick’s inventory for $10/bottle, 2/10 n30....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT