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

Limited Time Offer

25%

Off

Get Premium CIMAPRA17-BA3-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Reita

5 months ago

Totally agree, B makes the most sense here!

upvoted 0 times

...

Lili

6 months ago

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

upvoted 0 times

...

Wilford

6 months ago

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

upvoted 0 times

...

Stephen

6 months ago

Depreciation using reducing balance method is tricky!

upvoted 0 times

...

Estrella

6 months ago

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

upvoted 0 times

...

Sherron

6 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.

upvoted 0 times

...

Freeman

7 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?

upvoted 0 times

...

Annmarie

7 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.

upvoted 0 times

...

Evangelina

7 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.

upvoted 0 times

...

King

7 months ago

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

upvoted 0 times

...

Paola

8 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.

upvoted 0 times

...

Shonda

8 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.

upvoted 0 times

...

Lelia

8 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.

upvoted 0 times

...

Thora

1 year 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!

upvoted 0 times

Joesph

11 months ago

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

upvoted 0 times

...

Hyman

12 months ago

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

upvoted 0 times

...

Daren

12 months ago

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

upvoted 0 times

...

Desmond

1 year 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.

upvoted 0 times

...

Ryan

1 year 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?

upvoted 0 times

Lashandra

12 months ago

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

upvoted 0 times

...

Elmer

12 months ago

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

upvoted 0 times

...

Steffanie

1 year ago

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

upvoted 0 times

...

Lenita

1 year 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?

upvoted 0 times

...

Cecilia

1 year 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.

upvoted 0 times