CTRM mock assessment question - help please

Kwilb

Hello all,

I am really struggling with this 1st task of the Mock assessment (Sample CBT 1) for CTRM (level 4 AAT professional level) on the AAT website.

The question is quite long but I will write the bit that I struggle with.

The operating profit included depreciation of £124,000
The company purchased a non-current asset in the year ending 31 March 20X8
The carrying value of this non-current asset was £72,000
The depreciation rate is 25% and a full year's depreciation charge is made in the year of acquisition

What is the closing cash position as at 31 March 20X8 for the Purchase of non-current asset?
The answer -96,000 but I do not understand how to get that number!

I get -106,000 but it must be wrong, here are my calculations :

72,000 x 25% = 18,000
72,000 - 18,000 = 54,000
54,000 + 124,000 - 72,000 = 106,000
but it must be wrong, please could someone help me out ..!!!!

Many thanks
KWilb

hal978

The carrying amount is £72,000, i.e. after depreciation.
That means that the purchase price of this non-current asset is £72,000 / 0.75 = £96,000

Kwilb

THANKS SO MUCH, I got stuck on this question and it really bugged me.