Expensing a long lived asset

CFA Level I FRA
#1

I’m just trying to wrap my mind around this part. When a firm expenses a long lived asset, they have higher ROA and ROE in the following years partly because assets and equity are both lowered. What I’m not grasping is why are they lowered? The way I’m looking at it is if I buy a factory and write the whole expense off in the first year, I don’t have to depreciate it in the future years and so assets should be higher compared to capitalizing it.

Then again, I have no idea what happens after an asset is fully capitalized/expensed. Is it just taken off the balance sheet? Where do we go to find out how many assets a firm owns but are no longer on the balance sheet?

Cliffnotes: Ugh. FRA.

#2

When you expense off any asset the unamortised or undepreciated part of that asset is removed from asset side of balance sheet and is charged as expense in statement of profit & loss.

So, if you are expensing a long lived asset then your current year ROA and ROE will be less as the N.I. will get reduced and in subsequent years the ROA and ROE will be more as there will be no charge of depreciation of already expensed off asset.

If a firm expenses a substantial part of long lived asset, then there should be a note in financial statements.