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- June 2, 2020 at 11:46 am
Please explain why the balancing allowance is not taken here, we have realisable value of 250.
I didn’t understand why 250 is added when said the value is between 250-300
Also why not deducted for depreciationJune 2, 2020 at 4:43 pmAs the examiner has written in his answer, “no balancing allowances or charges have been estimated as the year 5 realisable value of fixed assets has been estimated on an after-tax basis”.
We are not sure of the realisable value and so it is sensible to use the worst estimate. It could turn out to be better, but even if it was 300 the NPV would still be negative.
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