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Sir, In this BPP section C questions part
(D) a new investment decision was given and subsequently the change in ROI/RI
I found it quite perplexing why are the assets valued at the opening date?
Shouldn’t we reduce the depreciation from both profits and net assets
Is it a rule or something to value the assets at opening value?
There are arguments for using the opening net assets and arguments for using the closing net assets.
The BPP answer is a copy of the examiners own answer, and the examiner prefers to use opening net assets (unless the question specifically says different) on the basis that it is the assets at the start of the period that generate the profit during the period.