Carrying Value Or Equipment Value

CFA Level I FRA
#1

All,

On page 454 of 2013 Curriculum OR page 478 of 2014 curriculum, Example 1, how did they calculate “equipment value” or carrying value = 14K for 2004; 16K for 2005 and 18K for 2006? Moreover, the carrying value increases from 2004 to 2006. How is this possible? I am not sure. I think carrying value = book value = Original cost - depreciation or amortization. Hence, the carrying value must go down with the passage of time. Right? I am really confused.

Please help me.

Thanks in advance.

#2

2006 : 14K, 2005 : 16K, 2004 : 18K. Please read it again carefully.

#3

Oh I am sorry. :frowning: Thanks for pointing this out.

#4

Also, I just checked Kaplan’s notes - Page 236 (2013 series - Book 3), the carrying value is $400K. I am not sure how this is possible because EBITDA = $500K and Depreciation = $200K. Hence, ‘carrying value’ should be $300K. Am I right? Moreover, Tax base should be $200K because accelerated depreciation for tax = $300K.

Any thoughts?

Thanks in advance.