ap0258

Thank for all help. But I have a issue.

Image a hypothetical company with some figures:

NI (before below expenditure) = $ 7,000
Expenditure = $ 1000
Asset = $ 5,000
Tax = 40%

So,
If Capitalize, ROA = $ 7,000/ ($ 5,000+$ 1000)= 117%
If Expensing, ROA = ($ 7,000-($1000x60%))/$5,000= 128% greater than 117% (in frist year)???

Am I misunderstand in somewhere?