Expected present value of the cleanup provision

Assignment Help Accounting Basics
Reference no: EM13155945

Techtronics, a technology company that uses iGAAP for its financial reporting, has been found to have polluted the property surrounding its plant. The property is leaded for 12 years and Techtronics has agreed that when the lease expires, the pollution will be remediated before transfer back to its owner. The lease has a renewal option for another 8 years. If this option is exercised, the cleanup will be done at the end of the renewal period. There is a 70% chance that the lease will not be renewed and the cleanup will cost $120,000. There is 30% chance that the lease will be renewed and the cleanup costs will be $250,000 at the end of the 20 years. If you assume that these estimates are derived from best estimates of likely outcomes and the risk-free rate is 5%, the expected present value of the cleanup provision is what ??

Reference no: EM13155945

Questions Cloud

What is the volume of dry gas : If 77.0 mL of hydrogen gas is collected over water at 50.0 degrees celsuis and 763 mm Hg, what is the volume of dry gas at standard conditions? The vapor pressure of water is 92.5mm Hg at 50.0 degrees celsuis .
What would be the genetic constitution : In rabbits, black is due to a dominant gene, B, and brown to its recessive allele, b. Short hair is due to a dominat gene, S, long hair to its recessive allele, s.
Find the expected monetary value with the survey : The expecyed monetary value with no survey is $62,000. If the expected value of sample information is -$7,000, what is the expected monetary value with the survey?
Role of finance department in company today : Define and discuss the role of the finance department in a company today. Place particular emphasis on the job of Chief Financial Officer.
Expected present value of the cleanup provision : If you assume that these estimates are derived from best estimates of likely outcomes and the risk-free rate is 5%, the expected present value of the cleanup provision is what ??
Explain the equilibrium constant kp : When equilibrium is reached at 700C, the total pressure of the system is found to be 4.00 atm. If the equilibrium constant Kp for this reaction is equal to 1.52,
What magnitude of current is required : A major source of sodium metal is produced as a result of electrolysis of molten sodium chloride. What magnitude of current is required to produce 1.0 kg of sodium metal in one hour
Which characters is dependend upon a dominant gene : A spotted rabbit, when crossed with a solid-colored rabbit produced all spotted offspring. When these F1 rabbits were crossed among themselves they produced 32 spotted rabbits and 10 solid rabbits.
She is considering major attributes that she considers : Roshima is researching universities where she could study for her MBA degree. She is considering 3 major attributes that she considers important in her choice

Reviews

Write a Review

Accounting Basics Questions & Answers

  Appropriate adjusting entry for vacations

No accrual entries have been made for the vacations. No over-time premium and no bonuses were paid during the period. Prepare the appropriate adjusting entry for vacations earned but not taken in 2011.

  What controls must have been lacking at white electric

What the bookkeeper did was definitely unethical. But what if one of her grandchildren had been ill and needed an expensive operation? If this had been the case, would it have been ethical for her to take company funds to pay for the operation if ..

  Problem related to straight-line method of depreciation

ABC Corp. purchased an asset on January 1, 2008, for $10,400. The asset was expected to have a ten-year life and a $1,000 salvage value. ABC Corp. uses the straight-line method of depreciation. On January 1, 2010, ABC Corp. determines that the ass..

  How transaction influence the accounting equation

Simpson Auto Body Repair purchased $20,000 of Machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly installments. How will this transaction affect the accou..

  Journalize the transactions and the adjusting entries

The following transactions, adjusting entries, and closing entries were completed by Trail Creek Furniture Co. during a three year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is use..

  Financial statements of the client

Actual litigation by the client against the auditor for an amount not material to the auditor or to the financial statements of the client arising out of disputes as to billings for tax services.

  Select an initial public offering

Select an Initial Public Offering (or a Secondary Offering) completed in the last 10 years in U.S. capital markets, and discuss and analyze this IPO in 7-8 pages, double-spaced.

  Entries required to record the issuance of bonds

On january 1, 2004 kate products issued ten year convertible bonds of $1800000 at 105. Interest es payable semiannually on june 30 abd dicember 31 at a rate of 12%. straight-line amortization is recorded at the end of the calendar year.

  Acquisition of machine

Page Company is contemplating the acquisition of a machine that costs $50,000 and promises to reduce annual cash operating costs by $11,000 over each of the next six years.

  Analysis of agency

Identify a public agency - either at the local, state, or federal levels - that has undergone significant change in the last 25 years. You may choose an agency that you have had personal experience with, or you may choose a public agency that you ..

  Payment alternatives for the use of space

The company will purchase the carpets from a local distributor for $350 each, with the privilege of returning any unsold units for a full refund. Jerry's club has offered Color Rugs two payment alternatives for the use of space.

  Basics of cash flows from financing activities

Which of the following would be included in cash flows from financing activities?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd