You are the new human resources manager and are reviewing the bonus policies as part of familiarizing yourself with the payroll system. The plant superintendent?s bonus is calculated as the return on total assets ratio for the year times one month?s salary. You have the information below and, recalling some basic accounting that you took while attending a post-secondary educational institution, you make a note to ask why doubledeclining- balance depreciation is not being used, given the nature of the plant assets. Also, in speaking with one of the plant supervisors you discover that the useful life of this type of machinery is typically 12 years and its residual value is $100,000.

Required

Using the elements of critical thinking described on the inside front cover, discuss the issues, define the problem, and identify the goal and assumptions and the facts. Before coming to a conclusion, you may want to prepare a schedule, calculating the adjusted profit and the adjusted total assets by adding back the straight-line depreciation and then subtracting the double-declining-balance depreciation, and then calculate the adjusted return on assets.

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December 31 2019 2020 2018 2017 $ 782,600 101,469 $ 559,000 63,146 $ 430,000 38,714 Net sales. $1,252,160 194,844 Profit (loss) before tax. Plant assets, net Total assets 943,500 1,046,226 870,500 1,066,872 834,000 1,109,969 907,000 1,051,754