answer only question b

1. Tootlealong Ltd is a public transport company that runs bus services. The company's management currently uses historical cost values but is considering alternative valuations of its non-current assets. The company's accountant has collected a range of values on three of its buses (non-current assets). The information is presented in the table below: Tootlealong Ltd Bus Z Historical cost of asset Annual depreciation rate Expected sales value net of all selling costs Current purchase price of an asset in a similar condition Bus X 150,000 20% 83,800 Bus Y f 180,000 10% 150,000 200,000 20% 143,000 165,000 218,000 210,000 The following additional notes on the three buses may be relevant: Bus X is used as a stand-by vehicle for when other buses are off the road due to breakdowns or scheduled maintenance. If the use of Bus X wa not available it is estimated that Tootlealong Ltd would have to spend 21,000 per annum to rent an equivalent bus from another firm. Annual maintenance costs for Bus X is 9,600, Due to its contractual obligations to provide a continuous service, the company has to have a stand-by facility for when its vehicles are off the road. Bus Y is one of the company's regularly used vehicles. It has an expected life of 10 years and the company is able to generate 14,200 annually during its expected life from the use of this asset. Bus Z is another of the company's frequently used vehicles. It has an expected life of 5 years and is able to generate 37,200 annually for the span of its expected life. The company's expected return on capital invested is 10%. Required: a) What is deprival value? How useful is an alternative valuation such as deprival value for Tootlealong Ltd's managers? (11 marks) b) Calculate the deprival value for Buses X, Y and Z to the nearest 1. You should ignore the effects of taxation. (14 marks) 1. Tootlealong Ltd is a public transport company that runs bus services. The company's management currently uses historical cost values but is considering alternative valuations of its non-current assets. The company's accountant has collected a range of values on three of its buses (non-current assets). The information is presented in the table below: Tootlealong Ltd Bus Z Historical cost of asset Annual depreciation rate Expected sales value net of all selling costs Current purchase price of an asset in a similar condition Bus X 150,000 20% 83,800 Bus Y f 180,000 10% 150,000 200,000 20% 143,000 165,000 218,000 210,000 The following additional notes on the three buses may be relevant: Bus X is used as a stand-by vehicle for when other buses are off the road due to breakdowns or scheduled maintenance. If the use of Bus X wa not available it is estimated that Tootlealong Ltd would have to spend 21,000 per annum to rent an equivalent bus from another firm. Annual maintenance costs for Bus X is 9,600, Due to its contractual obligations to provide a continuous service, the company has to have a stand-by facility for when its vehicles are off the road. Bus Y is one of the company's regularly used vehicles. It has an expected life of 10 years and the company is able to generate 14,200 annually during its expected life from the use of this asset. Bus Z is another of the company's frequently used vehicles. It has an expected life of 5 years and is able to generate 37,200 annually for the span of its expected life. The company's expected return on capital invested is 10%. Required: a) What is deprival value? How useful is an alternative valuation such as deprival value for Tootlealong Ltd's managers? (11 marks) b) Calculate the deprival value for Buses X, Y and Z to the nearest 1. You should ignore the effects of taxation. (14 marks)