Kaplan Practice Assessment Answer Query

akilahdale
akilahdale Registered Posts: 28
in AAT Level 3 (Level 6 in Scotland)
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 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 Registered Posts: 93 New contributor 🐸
    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 Registered Posts: 645
    Neither did I! Every day's a school day!
  • stevef
    stevef Registered Posts: 258 Dedicated contributor 🦉
    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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