Kaplan Practice Assessment Answer Query

I've just completed a practice assessment on the Kaplan website and when I went through the answers, one of them confused me as I think my answer is right even though they marked it wrong. Link to my answer is below.

https://drive.google.com/file/d/0B0k6yRvOHIODX1gySkhrVVNkU00/view?usp=sharing

My answer is on the right, the model answer is on the left.


Comments

  • CeeJaySix
    CeeJaySix Well-Known Registered Posts: 645
    Have to say I agree with your answer. It doesn't look like the Kaplan answer has accounted for the residual value.
  • akilahdale
    akilahdale Registered Posts: 28
    Thought as much. Thanks.
  • ChrisJ30
    ChrisJ30 Just Joined CambridgeMAAT Posts: 93
    Remember residual value doesn't matter on a diminishing balance basis. So 30% of £20,000 (@cost) = £6,000
  • akilahdale
    akilahdale Registered Posts: 28
    Oh! Wow, I didn't realise that. Thank you.
  • CeeJaySix
    CeeJaySix Well-Known Registered Posts: 645
    Neither did I! Every day's a school day!
    akilahdale
  • stevef
    stevef Well-Known CarmarthenRegistered Posts: 258
    On a diminishing balance calculation the residual value is taken into account when calculating the depreciation rate. So in the example, applying the 30% to the reducing balance over the life of the asset should leave the residual value as the final balance.

    You do not have to include the residual balance in the annual depreciation calculation.
  • akilahdale
    akilahdale Registered Posts: 28
    Ah ok. Thanks for explaining.
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