Dyane Company Business of Telecommunication Case Discussion
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Dyane Company Business of Telecommunication Case Discussion
Question Description
Dyane Company is in the business of telecommunication. It is given a concession by the government to operate the business for 10 years. In the year 2021, it sets up its telecommunication network facilities. The agreement with the government requires the company to decommission the network facilities at the end of the concession period.
Based on the current technology, the cost of decommissioning at the end of 10 years is estimated at Php 150,000,000. Because of the changes in technology in decommissioning work, it is reasonably probable that the cost of decommissioning would be reduced by the end of the concession period.
The company estimates that there is a 30% (high) chance the cost will be Php 90,000,000. A 40% (medium) chance the cost will be Php 100,000,000 and a 30% (low) chance the cost will be Php 110,000,000. The residual value of the facilities is negligible and no gain or loss is expected from their eventual disposal after 10 years.
The current risk-free rate of interest is 5% for the risk specific to the liability, the variability of the possible outflows, and additional 10% on the expected cash outflows is considered a reasonable estimate.
The present value factors are as follows
Present value factor of 5% for 10 periods 0.613913
Present value factor of 10% for 10 periods 0.385543
What is the amount of provision required for the decommissioning costs that should be recognized and included as additional cost of the facilities?
On the date of retirement, what amount of the proceeds represents the equity component?
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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