Reducing Balance Dep (Osborne page 99)

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
Hi all<BR><BR>Getting a bit fuzzy eyed now as I have been reading a lot the last couple of days, please can someone explain to a tired brain how the formula for calculating reducing balance depreciation actually gets to the answer of 0.331 or 33.1% on page 99 of the Osborne Tutorial Intermediate book. (Formulaes have never been a friend of mine!)<BR><BR>I understand what it's getting at, but although my calculations get to the 0.669 do I assume you just divide this by 2 to arrive at the answer, plus my answers keep coming out with minus figures, (albeit the same as the figures in the book just in the negative!) can someone help before I over confuse the issue and stop myself from learning how to do it correctly!!!<BR><BR>If someone can help who hasn't got the book, it is showing how an asset with a value of £2000 with a residual value of £400 is reduced for depreciation over a 4 year period, basically it is showing how to work out that the percentage rate is 33.3%<BR><BR>Thanks in advance<BR><BR>Tracy<BR><BR>(ps I apologise if it is really simple and I have merely missed the obvious, it's a trait of mine that I am rather good at!!)<BR><BR>pps Whilst I'm coming across as a bit vacant I might as well go the whole hog and ask..... what does the 1 - represent???<BR><BR>There I've done it, I've shown everyone in plain English that I am thick!!!<BR><BR>Help me please!!!!!!!!<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    I havent got the book in front of me, but i have a feeling this is what i was asking when i did FRA.<BR><BR>Am I thinking you want to know how to work out the precentage rate for reducing balance? The answer is YOU DONT!!!<BR><BR>For intermediate level you will ALWAYS be given the precentage rate for the reducing balance.<BR><BR>I asked my tutor about it and he told me not to worry, however he did say IF you really want to know how to do here are the instructions - I have them at home if you want them!! But you need a Scientic calculator!!<BR><BR>Hope this helps<BR><BR>Amanda
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    Hi Amanda<BR><BR>Thanks a lot for your reply, had a feeling it would be you who answered! Thanks for your advice, I was really stumped, the thing with me is once my brain has learnt something one way it confuses itself if it has to learn something another way!<BR><BR>It would help if you could let me have the instructions so that I have an idea what I am doing, my email address should be in my profile, if not let me know and I will post them on here.<BR><BR>Thanks again!<BR><BR>Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    I will do - they are on a e-mail at home!!<BR><BR>Give me a knock if i forget!!<BR><BR>Amanda
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    as mentioned by others you will not have to calculate it in the examinations. but its always better to learn how it is done. <BR>i hope my explanation helps<BR>you have mentioned that you got the answer as .669<BR>now do the following <BR> 1 - 0.669 = 0.331 ( this is the use of 1 - given in the formula)<BR>and when you convert it into percentage (multiply with 100)<BR>you get 33.1 % (which is approx 33.3)<BR><BR>and for solving this u do not need to have a scientific calculator. you can do it on a simple calculator . as the no. of years is 4, you have to take the fourth root. just doing square root two times and you iwll get the answer. however for other figures we wuld need the scientific .<BR><BR>hope this is of some help to you
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    Thank you very much pvsharan, you have been most helpful, I am assuming that if I needed to work out the figure over an odd period of time ie 5 years, I would have to use a scientific calculator then?<BR><BR>It's good to know that it isn't as hard as I thought it was, and I feel confident I could work out a similar problem now.<BR><BR>However, Amanda I would still appreciate any notes you may have on this matter, as even though I don't need to know it for the exam I would like to know it all for my own piece of mind.<BR><BR>Thanks again to you both for your useful replies, I can study more soundly now knowing it makes sense!<BR><BR>Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    Wouldn't mind the notes myself please. jackiewood@hotmail.co.uk
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Reducing Balance Dep (Osborne page 99)

    could i also have the notes. i am interested p_av@rediffmail.com<BR>Thanks in anticipation

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