March June 2016 Emsee Q3a

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May 14, 2018 at 8:10 pm #451931
meganlvm
Member
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Hi

Q3a answer shown weighted average carrying amount was calculated by accumulating its cost. Why is it (20+50+70+120+170) and not (20+50+50+50)?

Thanks. Appreciate

Megan
May 16, 2018 at 8:09 pm #452313
P2-D2
Keymaster
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Hi,

It is because we are weighting the carrying value, so after each successive investment the carrying value will increase by the amount spent each month. We need to work out the average carrying value, not the average amount spent.

Thanks
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