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During the first month of its current fiscal year, Green Co. Incurred repair costs of $18,000 on a machine that had 5 years of remaining
During the first month of its current fiscal year, Green Co. Incurred repair costs of $18,000 on a machine that had 5 years of remaining depreciable life. The repair cost was Inappropriately capitalized. Green Co. reported operating income of $167,000 for the current year. Required: a. Assuming that Green Co took a full year's straight-line depreciation expense in the current year, calculate the operating Income that should have been reported for the current year. Operating Income $ 152.000 b. Assume that Green Co.'s total assets at the end of the prior year and at the end of the current year were $945,000 and $1,029,000, respectively. Calculate ROI (based on operating Income) for the current year using the originally reported data and then using corrected data. (Round your answers to 1 decimal place. (e.g., 32.1)) ROI Original data Corrected data 96 c. Indicate the effect on ROI of subsequent years if the error is not corrected. O ROI will be too low ROI will be too high O ROI will remains the same 7
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