URGENT!! Non-current asset disposals AAT CASH & TREASURY (CTRM)
Oniyama100
Registered Posts: 7 New contributor 🐸
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.
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.
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Comments
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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 sale0 -
@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, £3120 -
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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