Hi guys,
I’m looking in the 2014 CFAI material on p.56 of FRA. In example 2, question 1 it says that the profit enhancing effects of capitalizing vs expensing will end in year 3, however wouldn’t expensing the computer lead to a total expense of $500 for the period rather than the $300 when you capitalize it? This seems to be a profit enhancing effect. Is it because you can’t simply switch between capitalizing and expensing the same item?