• 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

ACCA Webinars: How to earn marks in Strategic Professional Exams. Learn more >>

20% off BPP Books for ACCA & CIMA exams - Get BPP Discount Code >>

INVESTMENT APPRAISAL BPP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › INVESTMENT APPRAISAL BPP

  • This topic has 3 replies, 2 voices, and was last updated 2 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 9, 2022 at 2:14 pm #658108
    Shi2004
    • Topics: 77
    • Replies: 30
    • ☆☆

    Nw co is considering investing $46000 in a new delivery that will last for 4 years after which time will be sold for 7000 $. Depreciation on straightline.
    Year 1 $16500
    2. 23500
    3. 13500
    4. (1500)
    Average profit is after depreciation but in this question they don’t deduct the depreciation to find the average investment. Why is that???

    June 9, 2022 at 4:16 pm #658143
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49993
    • ☆☆☆☆☆

    The average investment is the average of the initial cost (46,000) and the final value (7,000).
    That is how we always calculate it, as I explain in my free lectures.

    (The difference between the 46,000 and the 7,000 is the total depreciation, but that is of no relevance to calculating the average amount invested over the period.)

    June 9, 2022 at 4:27 pm #658151
    Shi2004
    • Topics: 77
    • Replies: 30
    • ☆☆

    But why it is of no relevance to find the depreciation?

    June 9, 2022 at 4:45 pm #658160
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49993
    • ☆☆☆☆☆

    Because it is not needed to calculate the average investment. The average investment in the SOFP is the average of the initial value and the final value as I explained in my previous reply.

    Have you watched my free lectures on the ARR method of appraisal?

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

ACCA Introducing professional skills into the Options exams

ACCA Professional Skills Webinar – Register now

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • sohaib.ahmad on Index Numbers – ACCA Management Accounting (MA)
  • daarmc on Relevant cash flows for DCF Taxation (example 4) – ACCA Financial Management (FM)
  • jamescoffey565 on The cost of capital – The cost of equity – ACCA Financial Management (FM)
  • eloiseparry on CIMA F2 Analysis and Interpretation – Performance
  • John Moffat on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


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