Simple rate of return

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Simple rate of return

The return from investments figured by dividing income plus capital gains by the amount of capital invested. The effect of compounding is not taken into account.

Simple Rate of Return

An estimate of the return on an investment. It is calculated simply by finding the investment's profit before taxes and interest expenses. The simple rate of return is easy to calculate but is not always accurate because it considers the investment's profit rather than cash flow. It also does not take into account the effects of compounding. It is also called the accounting rate of return or the book value method.
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An often-overlooked significant event is the use of the tax book value method (or alternative tax book value method) of apportioning interest expense under Sec.
The adjusted book value method usually renders a value higher than reported book value.
For determining the values by Adjusted Book Value method we have proceed to the net asset accounting correction, based on data from year n, by discounting the historical costs of non-current assets taking as a basis for discounting exchange ratio ROL / USD, obtaining the results from Table 3.
It clarifies that for vehicles a taxpayer is leasing on 1st April 2006, they will be required to use the cost method to calculate the FBT liability without the option to use the book value method.
Some modifications of the book value method include the tangible book value method, which basically includes only assets, such as cash, inventory, equipment, and real estate.
Department of the Treasury and Internal Revenue Service issued temporary and proposed regulations under section 861 of the Internal Revenue Code, relating to the use of an alternative tax book value method for allocating and apportioning interest expense.
The book value method is based on the idea that a firm's value can be found in the reported net worth of its underlying assets (Kam, 1986).
It is more practical than the book value method and, according to the Uniform Partnership Act (UPA), is the preferred method if no buyout clause has been established in the original partnership agreement.
In the book value method, the company's valuation is deemed equal to the book value of the net assets at the date of the valuation.
A 10 percent or more corporate partner uses the parthership's inside basis in the partnership assets when using the tax book value method for apportioning interest expense.