Question
Depreciation and Rate of Return Burrell Company purchased a machine for $21,000 on January 2, 2019. The machine has an estimated service life of
Depreciation and Rate of Return Burrell Company purchased a machine for $21,000 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 $10,500 each year. The tax rate is 35%. 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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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
324300980, 978-0324300987
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