Depreciation and Rate of Return Burrell Company purchased a machine for $43,000 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 $21,500 each year. The tax rate is 25%. 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 fill in the blank 1 % 2020 fill in the blank 2 % 2021 fill in the blank 3 % 2022 fill in the blank 4 % 2023 fill in the blank 5 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 fill in the blank 6 % 2020 fill in the blank 7 % 2021 fill in the blank 8 % 2022 fill in the blank 9 % 2023 fill in the blank 10 %
Depreciation and Rate of Return Burrell Company purchased a machine for $43,000 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 $21,500 each year. The tax rate is 25%. 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 fill in the blank 1 % 2020 fill in the blank 2 % 2021 fill in the blank 3 % 2022 fill in the blank 4 % 2023 fill in the blank 5 % Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number. 2019 fill in the blank 6 % 2020 fill in the blank 7 % 2021 fill in the blank 8 % 2022 fill in the blank 9 % 2023 fill in the blank 10 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Burrell Company purchased a machine for $43,000 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 $21,500 each year. The tax rate is 25%.
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 | fill in the blank 1 % |
| 2020 | fill in the blank 2 % |
| 2021 | fill in the blank 3 % |
| 2022 | fill in the blank 4 % |
| 2023 | fill in the blank 5 % |
Double-declining-balance depreciation method. Round to two decimal places. Round your intermediate dollar value calculations to the nearest whole number.
| 2019 | fill in the blank 6 % |
| 2020 | fill in the blank 7 % |
| 2021 | fill in the blank 8 % |
| 2022 | fill in the blank 9 % |
| 2023 | fill in the blank 10 % |
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