There is a question in Kaplan Kit ( Armcliff co ) where we were required to calculate the ARR. And in it’s the average investment has been calculated by adding the book values of the asset over its life of 4 years and then dividing by 4. Why initial investment + scrap value / 2 was not used?
I do not have the Kaplan Exam Kit (only the BPP Revision Kit). However the average capital employed should be calculated as initial investment + scrap value / 2.