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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Dec 14
Sir in question 4, what is this economic depreciation. And while calculating capital employed for 2013 why have they taken figure of 2012 is it misprint or its correct.
Thanks
You cannot be asked to calculate economic depreciation, but it is the drop in value due to the change in potential earnings. Because you cannot be asked to calculate it, we assume that it is equal to the accounting depreciations.
For capital employed (for EVA) we use the capital employed at the start of the year (end of last year) if we have the information available.
So that means if we dont have information then we take it of same year.Am i right.
Thanks
Yes – in that case you would have no choice.
But better always is to use the opening capital employed if it is available.