scr879

giakhanh39 Wrote:
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> In Schwesernotes stated that: "Capitalizing an
> expenditure will initially results in higher
> return on assets (ROA) and higher return on equity
> (ROE)". Any one can prove it for me, please?
>
> I think Capitalizing make higher return but
> increase asset or equity also, therefore, I am not
> sure such ratios up or down relatively
> expensing!!! May it give more condition like ROA
> is more or less than 1 to be more clear???
>
> Thank for any help!

Think of it this way: NI is a lot higher when capitalizing vs expensing in the first year, therefore, ROA and ROE is higher, too.