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Part A Kelisen Ltd recently purchased a new dyeing machine for $100,000. Management expects the dyeing machine to generate the following additional revenues and expenses
Part A Kelisen Ltd recently purchased a new dyeing machine for $100,000. Management expects the dyeing machine to generate the following additional revenues and expenses during its useful life. Average incremental revenue $50,000 per year Average incremental expenses (depreciation not included) $20,000 per year The dyeing machine has an expected life of 6 years and is depreciated using the straight line method You are required to: a) Prepare a schedule showing the incremental revenue, incremental operating expenses and incremental depreciation during each of the next 6 years b) Calculate the accounting rate of return on the dyeing machine, using the initial investment as the denominator
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