CIMAPRA17-BA3-1 Exam - Topic 1 Question 110 Discussion

Actual exam question for CIMA's CIMAPRA17-BA3-1 exam

Question #: 110
Topic #: 1

A non-current asset was purchased for 240000 at the beginning of Year 1, with an expected life of 7 years and a residual value of 50000. It was depreciated by 20% per annum using the reducing balance method.

At the beginning of Year 4 it was sold for 100000. The result of this was:

AA loss on disposal of 2720

BA loss on disposal of 22880

CA profit on disposal of 50000

DA profit on disposal of 58571

Show Suggested Answer

Suggested Answer: B

by Cassie at Apr 06, 2025, 04:15 PM

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Reita

2 months ago

Totally agree, B makes the most sense here!

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Lili

2 months ago

Wait, how can there be a profit if it was sold for less than purchase price?

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Wilford

3 months ago

I think it's option B, a loss of 22880.

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Stephen

3 months ago

Depreciation using reducing balance method is tricky!

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Estrella

3 months ago

The asset was bought for 240k and sold for 100k.

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Sherron

3 months ago

I’m leaning towards option D, but I’m not completely confident. I remember the residual value plays a role, but I need to clarify how it affects the final sale price.

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Freeman

4 months ago

I feel like the profit or loss on disposal depends on the carrying amount, but I can't recall the exact figures. Was it 20% of the book value each year?

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Annmarie

4 months ago

I think we did a similar question where we had to find the carrying amount before disposal. I need to double-check my calculations for Year 4.

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Evangelina

4 months ago

I remember we practiced calculating depreciation using the reducing balance method, but I'm not sure how to apply it here with the sale.

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King

4 months ago

Wait, what's the residual value again? I want to make sure I account for that properly in the depreciation.

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Paola

4 months ago

No problem, I've got this. Reducing balance depreciation is straightforward, and the rest is just plugging the numbers into the disposal calculation.

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Shonda

5 months ago

Hmm, I'm a bit unsure about the reducing balance method. I'll need to review the formula and make sure I apply it correctly.

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Lelia

5 months ago

Okay, this looks like a depreciation and disposal question. I'll need to calculate the net book value at the time of disposal and compare it to the sale price to determine the gain or loss.

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Thora

9 months ago

Ah, the old reducing balance method. I thought that was just for my bank account! But seriously, I'm gonna go with option D. Why? Because it's the most 'balanced' answer, of course!

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Joesph

8 months ago

User 3: I'm not sure, but I'll go with option D too.

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Hyman

8 months ago

User 2: Yeah, I agree. It seems like the most balanced choice.

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Daren

9 months ago

User 1: I think option D is the correct answer.

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Desmond

10 months ago

You know, I was thinking about becoming an accountant, but after this question, I'm not so sure. Anyway, I'll go with option C, a profit on disposal of 50000. Sounds like the safest bet to me.

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Ryan

10 months ago

Alright, time to put my calculator to work! I'm gonna go with option A, a loss on disposal of 2720. Gotta love those depreciation calculations, am I right?

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Lashandra

9 months ago

User 3: Yeah, depreciation can really impact the financial statements.

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Elmer

9 months ago

User 2: I agree, the calculations can be tricky sometimes.

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Steffanie

9 months ago

User 1: I think it's option A, a loss on disposal of 2720.

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Lenita

10 months ago

Yikes, this question is a real head-scratcher. But I'm feeling confident about option B, a loss on disposal of 22880. Got to show my accounting chops, you know?

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Cecilia

10 months ago

Hmm, let me think about this. Reducing balance method, huh? That's a tricky one. I'm gonna go with option D, a profit on disposal of 58571. Seems like the right answer to me.

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