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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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