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Illinois Power&Heat just spent $5 million repairing one of its electrical generating stations that was...

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Accounting

Illinois Power&Heat just spent $5 million repairing one of its electrical generating stations that was damaged by a tornado. The loss was uninsured. Management has asked the public service commission for approval to treat the $5 million as an asset for rate-making purposes rather than as an allowed expense.

Required: What difference will this make to customers and shareholders?

As part of the answer, explain what RAP is, and how/why it might be different from GAAP.

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