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Good evening. In question number 310 from the BPP kit, for the capital employed, we do not deduct the depreciation amount. I believe this is because it specifically asks for the RI of the initial investment. Incase the word initial investment is not used, would it be correct to deduct the capital employed figure by the depreciation amount for a year?
It depends on the specific instructions given in the question. If the question specifies to use the initial investment, then depreciation should not be deducted from the capital employed.
However, if the question does not specify this and asks for the capital employed at the end of the period or the average capital employed, then it would be appropriate to deduct the depreciation amount for the year.
Always follow the specific instructions provided in the question.
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