Question 1:
During the reporting period ending 30 June 2014, Midnight Boil Limited constructed a nuclear power generator just outside of Melbourne. The cost of the power generator and associated technology ammmted to $12,550000. Other costs associated with the Construction amounted to:
Costs incurred in obtaining access to the site 2,500,500
Power permits 400,500
Engineers' fees 1,100,500
4,001,500
The plant was ready to start generating power on 1 July 2014, with actual generation start¬ing on 1 October 2014. At the end of the power plant's useful life, which is expected to be 10 years, Midnight Boil Limited is required by government to dismantle the plant, remove it, and return the site to its original condition. After consulting its own engineers and envi¬ronmentalists, Midnight Boil Limited estimates these costs to be:
Dismantling the plant 750 500
Environmental remediation costs 1,249 500
Replacement of flora and fauna 100,000
2,100,000
Midnight Boil Limited uses a discount rate of 10 per cent.
REQUIRED
Prepare the journal entries necessary to account for the power plant for the years ended 30 June 2014, 30 June 2015 and 30 June 2020.