Abstract

The purpose of this case study is to examine a rational depreciation method to calculate the power generation cost of a nuclear power plant, which is classified as a long－term tangible asset. This study first reviewed existing depreciation methods, and analyzed the problems of calculating depreciation costs of nuclear power plants. Next, it proposed a new depreciation method that resolves known issues, and compared the calculated depreciation costs to those derived with existing methods. This study proposed a new method called the decelerated depreciation method to calculate the depreciation of a nuclear power plant. First, the depreciation of one nuclear power plant was 54 billion won in the first year when calculated using the straight－line depreciation method, and 16.2 billion won when using the decelerated depreciation method. The depreciation cost in the final year was the same 54 billion won under the straight－line depreciation method, and 126.7 billion won for the decelerated depreciation method. Second, based on scenario analysis, the straight－line method had a higher depreciation by 37.8 billion won than the decelerated depreciation method in 2016, and by 228.3 billion won in 2024. The decelerated depreciation method had a 347.7 billion won higher depreciation in 2075. The significance of this study lies in proposing a new depreciation method for long－term tangible assets such as nuclear power plants. The calculation of power generation costs is relevant to everyone using electricity, and is expected to have real－world benefits in terms of society and economy.

Keywords

• long－term tangible asset
• depreciation method
• decelerated depreciation
• power generation cost

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