Page 7 - CIMA MCS Workbook February 2019 - Day 2 Tasks
P. 7
Chapter 8
ADVANCED MANAGEMENT
ACCOUNTING (P2) PRACTICE TASKS
TASK 1 – REPLACEMENT ANALYSIS AND CAPITAL RATIONING
Trigger and task
To: Financial Manager
From: Senior Financial Manager
Date: Today
Subject: Asset replacement
Hi,
Morrison has asked me about whether we should have a policy in place for the replacement of
the significant levels of capital assets that we have at each practice. He’s worried that we don’t
have an efficient method of evaluating when assets should be replaced, especially as he’d like to
implement a complete refresh of customer facing assets at each practice.
Could you put together some notes on capital asset replacement analysis, including why there is
an issue over choosing appropriate replacement cycles, the rationale involved in an equivalent
annual cost comparison and the limitations of such calculations for Crowncare?
I’m also worried that if Morrison is focusing on a big refresh of assets that we don’t have enough
cash to do this. Could you put together some notes on how we could manage our capital assets
with a limited pool of cash available?
Regards,
Senior financial manager
Prepare the work that the Senior Financial Manager has requested. (Time 45 minutes)
KAPLAN PUBLISHING 27
