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When calculating EVA why $10m write off has not been included in the operating profit
why marketing return off has been deducted from capital employedThe economic depreciation includes the 10m write off so that does not have to be deducted again.
The capital employed needed is that as at the start of the year assuming that historic spends on marketing and R&D had been capitalised. Hence, 3528 and 900 were added to CE.
However, although marketing spend is capitalised it is subject to amortisation (10 each year is properly ncluded in economic depreciation). So the best value we have for the contribution of the marketing asset to CE is 900 – 10 x 10
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