Depreciation and Rate of Return Burrell Company purchased a machine for $12,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $6,000 each year. The tax rate is 30%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double- declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 23.3 % 2020 30 % 2021 42 % < 2022 70 % 2023 210 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 7.5 X % 2020 % 2021 % 2022 % 2023 % Feedback

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Depreciation and Rate of Return
Burrell Company purchased a machine for $12,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual
value. The asset earns income before depreciation and income taxes of $6,000 each year. The tax rate is 30%.
Required:
Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-
declining-balance depreciation methods. Assume that the machine is the company's only asset.
Straight-line method. If required, round to one decimal place.
2019
23.3
%
2020
30
%
2021
42
%
<
2022
70
%
2023
210
%
Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest
whole number.
2019
7.5 X %
2020
%
2021
%
2022
%
2023
%
Feedback
Transcribed Image Text:Depreciation and Rate of Return Burrell Company purchased a machine for $12,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $6,000 each year. The tax rate is 30%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double- declining-balance depreciation methods. Assume that the machine is the company's only asset. Straight-line method. If required, round to one decimal place. 2019 23.3 % 2020 30 % 2021 42 % < 2022 70 % 2023 210 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 7.5 X % 2020 % 2021 % 2022 % 2023 % Feedback
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