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Hi sir,
Hope you are well. I have doubt in this question in NUCLEAR STATION. Why we don’t have to take dep 175$ and recover cost 7000$??. I want to know that why we take only 486$ and 12000$. Can you please explain me the reason. Thank you in advance
If they were about to build the nuclear station then we would include the $7,000 cost of building it.
However the power station already exists and so it is only the futures costs that is relevant.
Depreciation is simply spreading the initial cost. If we were about to build a new station then (as I have written) we would include the $7,000 but we would not include depreciation because that would be including the $7,000 twice 🙂
However, again, we do not include the $7,000 here for the reason I have explained.
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