• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

FA- Depreciation Reducing balance method

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › FA- Depreciation Reducing balance method

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • September 12, 2021 at 6:03 pm #635601
    ChristelleBader
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hello,
    I would really appreciate some help. I have watched all the lectures pertaining to depreciation and have practiced the examples alongside your lectures. I have a question as I have seen questions that includes Scrap value with the reducing balance method. However online I am seeing a lot of confusing information. Let’s say I bought a vehicle for $5000 with a scrap value of $500, over a life of 5 years and 37% of depreciation per year. I am being asked the book value at the end of year 4.

    My solution for this was to approach the question by calculating the depreciation for each year and the net book value at the end of each period as below
    Year 1 cost of vehicle $5000
    Less Depreciation @ 37% ($1850)
    Book value end of year 1. $3,150
    Year 2 Less Depreciation @37%. ($1,165)
    Book value end of year 2. $1985
    Year 3 less depreciation @37%. ($734)
    Book value end of year 3. $1,251
    Year 4 less depreciation @37%. ($463)
    Book value end of year 4. $788

    Is this accurate? I am confused as I have seen several other methods for accounting for the reducing balance method when having a scrap value. Some explained to remove the scrap as from year 1 onwards and calculate the depreciation value (minus the scrap)) )- meaning year 1 depreciation would be calculated 37% x (5000-500) …

    Your help would be highly appreciated. As in your example for the reducing balance method we did not have any scrap accounted for it. Thanks ahead

    September 13, 2021 at 9:31 am #635638
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    The scrap value is not taken into account when calculating reducing balance depreciation. It is calculated based on the initial cost. (In real life there are no rules to stop you taking it into account, but it would be strange to do it, and certainly in exams we do not take the sale proceeds into account when using reducing balance depreciation)

    Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • tobimillz100 on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • omarcham on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • ANISH1903 on Outsourcing, shared services and disruptive technologies – ACCA Strategic Business Leader (SBL)

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy