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Mini-Exercise 6-4 (Algo) Effect of depreciation on ROI LO 3 Gandolfi Construction Co. purchased a CAT 336DL earth mover at a cost of $375,000
Mini-Exercise 6-4 (Algo) Effect of depreciation on ROI LO 3 Gandolfi Construction Co. purchased a CAT 336DL earth mover at a cost of $375,000 in January 2019. The company's estimated useful life of this heavy equipment is 20 years, and the estimated salvage value is $80,000. Assume that Gandolfi Construction Co. calculated depreciation expense for the CAT 336DL earth mover on the straight-line method and reported $552,500 of net income for the year ended December 31, 2019. The company's average total assets for 2019 were $3,250,000. Required: a. Calculate Gandolfi's ROI for the year ended December 31, 2019. Belum On favestnent for this year ended December 31, 2019 Choose Numerator; Net income $ 552,500 / Choose Denominator: Average total assets S RIX ROI 3,250,000- 17.0% b. Calculate what Gandolfi's ROI would have been for the year ended December 31, 2019, had the company used the double- declining-balance depreciation method for the CAT 336DL earth mover. Ignore the effects of income taxes. Beturn On Investment for the year ended December 31, 2013 Choose Numerator Net income Choose Denominator: Average total assets 529.750 $ 3.180,000 ROL ROI 16.7%
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