Depreciation

Does it actually say that it is too high or suggest that it might be too high – there is a difference. I suspect the latter – i.e. the answer is identifying the issue in which to frame the answer. I would have also questioned whether 20% and reducing balance is appropriate for computers – they could easily be obsolete after 3 or 4 years and probably have no residual value – so straight-line basis would be more appropriate.
Whatever asset you’re dealing with you need to consider what evidence should be available and how you are going to get it. After all, management did not just pluck a number out of the air. Reducing balance seems appropriate for vehicles (because they lose value more rapidly initially and even if they are 10 years old they have some residual value) but why 20%? As the answer suggests if the auditor looks at profits/losses on disposals – a pattern of profits would suggest that the assets are over-depreciated (i.e. % should be lower) a pattern of losses would suggest that they are under-depreciated (i.e. % should be higher).
(I am looking at the answer to Springfield Nurseries, if that is the question, it suggests that 20% may be too low – rather than too high.)
If in another question you had vehicles depreciated straightline over say 4 years – you would compare that with the company policy for vehicle replacement (should be 4 years) and the actual age of vehicles when replaced (it’s all very well having a policy, but maybe vehicles are still running around years after the policy says they should have been replaced).