Depreciation and Rate of Return Burrell Company purchased a machine for $20,000 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 $10,000 each year. The tax rate is 21%. 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 %
Depreciation and Rate of Return Burrell Company purchased a machine for $20,000 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 $10,000 each year. The tax rate is 21%. 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 %
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...
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![Depreciation and Rate of Return
Burrell Company purchased a machine for $20,000 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 $10,000 each year. The tax rate is 21%.
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
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fed059ab2-5771-4ddf-a07d-d643a95156e8%2F508ac039-87c8-4521-8680-2d550a3ff870%2F9p8dbb1l_processed.png&w=3840&q=75)
Transcribed Image Text:Depreciation and Rate of Return
Burrell Company purchased a machine for $20,000 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 $10,000 each year. The tax rate is 21%.
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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