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ROCE

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › ROCE

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
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  • November 25, 2020 at 1:25 am #596341
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    Sir when calculating ROCE for any project, we need initial capital investment. But does that initial capital investment figure includes capitalised expenditure on R&D? I think it should not as R&D expenses are sunk costs but my study text seems to suggest otherwise… could you shed some light on this sir?

    November 25, 2020 at 8:38 am #596370
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54804
    • ☆☆☆☆☆

    Because ROCE is an accounts based measure, we include all expenditure that will be capitalised on the SOFP.

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