URGENT!! Non-current asset disposals AAT CASH & TREASURY (CTRM)

Please please can someone explain to me how the attached AAT practice question is answered? The answer is £312, but I have no clue how this is arrived at and why.

It seems from the examiners' report that the asset disposal questions on this exam are proving difficult and I can see why.

Any help would be hugely appreciated.


  • bryan_ibe
    bryan_ibe Registered Posts: 2
    You have to do a reconciliation of your NCA and Acc Decpcn.

    NCA 4016-3633 = 383 (asset at cost)
    Accumulated depcn 409+50-322 = 137 (Beginning AD-AD of disposed asset+depcn in period = Ending AD)
    NBV of sold asset = 383-137=246

    Proceeds from disposal = 246+66=312

    The assumption is that assets are not depreciated in the year of sale
  • davealucas
    davealucas Taunton, SomersetMAAT Posts: 110 Dedicated contributor 🌟 🐵 🌟
    edited July 12
    @Oniyama100 First of all you need to remember that this is a disposal. When a non-current asset is sold, it needs to be taken out of the cost and the accumulated depreciation.

    The difference of those figures between period 3 and period 4 shows that the original cost was £383 (£4,016 less £3,633) and that accumulated depreciation was £87 (£409 less £322). This means that the net book value was £296 (£383 less £87). There was also a depreciation line for period 4 of £50, making your net book value upon disposal £246.

    A further line shows that you made a profit of £66 on the disposal, so you sold it for £312 (£246 plus £66).

    The disposal proceeds were, therefore, £312
  • EvilCalculator
    EvilCalculator Registered Posts: 6
    If you have the Kaplan book this can be seen in chapter 1 or 2?

    Closing Carrying Amount = Opening Carrying Amount + Additions for Year - Carrying Amount of Disposals - Depreciation.

    You have been given all the figures but the carrying amount for the disposal. Substitute figures.

    (3633 - 322) = (4016 - 409) + 0 - Disposal - 50

    Carrying Amount of disposal = 246

    Plus profit of £66

    Proceeds are £312

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