Cost Associated with mothballing a nuclear power plant at the end of its useful
ID: 105730 • Letter: C
Question
Cost Associated with mothballing a nuclear power plant at the end of its useful life, approx 20 yrs in the future, will be paid by the utility company at the end of the 20 years period. When should the expense be recognized for this expenditure? Current utility users receive the benefit of this plant. Do accounting rules require them to pay the cost in terms of increased utility rates by including the expense of the future mothballing in their rates, or should the expense be delayed for 20 years, until the cash is actually paid out?
1. In the manner consistent with the principles of Deontology, what is the right thing to do? What is the right reason for your decision?
Explanation / Answer
The right thing thing to do according to my opinion is that the associated cost should be paid constantly as the benifits are being recieved by the the consumers.With increasing number of consumer recieving more and more benifits,the plant gets overutilized in comparison to its maintainance.Thus this cost of maintainance must be included in the expense and taken care of immedietely.