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Q 71.4:
Please help me to explain why in the answer, when they calculate capital employed, the depreciation was already deducted by 0.2m on the new asset but still deducted from profit.ROI is an accounting measure using profit (as per the Statement of profit or loss) and asset value (as per the Statement of financial position).
It is normal financial accounting rules to charge depreciation in calculating the profit, and to reduce the value of the asset on the Statement of financial position by the amount of the depreciation.
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