Question
Burrell Company purchased a machine for $43,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated
Burrell Company purchased a machine for $43,000 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 $21,500 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 | % |
2020 | % |
2021 | % |
2022 | % |
2023 | % |
Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number.
2019 | % |
2020 | % |
2021 | % |
2022 | % |
2023 | % |
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