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DOUBTS – QUESTION D CALCULATE THE NEW ROI AND RI
the new investment in machiney cost 2.12mil and has some deprreciation related to it I checked out the solution and in the solution the full investment amount of 2.12mil is included in net assers while calculating new ROI without subtracting any depreciation from the net assets figure but the depreciation is sutracted from profit
shouldn’t depreciation be subtracted from the new net assest amount figure as well?
Unless the question states otherwise, the examiner prefers the ROI to be calculated using the opening value of the net assets soon the basis that it is the net assets at the beginning of the period that generate the profit for the period.