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Hello,
My question relates to question Zilber hotels.
In exibit 2 it says that the hotel is planning on 2-year refurbishment program. In the answer it says that if the company realizes the program, the cost of the assets will increase (thus ROCE decrease).
How should we know that the refurbishment will be capitilzed but not expensed? Because it is a program? In my view refurbishment is a repair.
Thanks!I think its ambiguous. Repairing would be revenue; replacing an asset would be capital.
So, not 100% clear here. I think I would have plumped for capiral as, like you say, program implies something big which would probably involve replacement of fixtures and fittings, new kitchen equipment etc.
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