A powerhouse originally built for Rs. 4,00,000 is to be replaced by a new one. The total cost of consturction is Rs. 14,00,000. But the estimated cost of construction of the original size powerhouse at present is Rs. 6,00,000. The revenue cost will be

The correct answer is A. Rs. 4,00,000.

The revenue cost is the cost of the original powerhouse, which is Rs. 4,00,000. The cost of the new powerhouse is Rs. 14,00,000, but this is not

relevant to the question of revenue cost. The estimated cost of construction of the original size powerhouse at present is Rs. 6,00,000, but this is also not relevant to the question of revenue cost. The revenue cost is always the cost of the original asset, regardless of its current value or the cost of replacing it.