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Hello!
This qn is referring to KODIAK COMPANY (DEC 09).
How did they arrive at the figures? Can you please specify where I could be wrong.
depr = 10% * 1266 = 127
additions = 127 + (1266*1.20) – 1266 = 380Thank you.
Firstly, note 1 of the question says that the depreciation is 10% on the balance before the accumulated depreciation – so it is 10% of cost.
Secondly, the investment in new NCA’s grows by 20%. So 66 x 1.2 = 79.
Therefore the cost of NCA’s is 1,266 + 79 = 1,345
Therefore depreciation is 10% x 1,345 = 134.
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