Depreciation and Rate of Return Burrell Company purchased a machine for $46,000 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 $23,000 each year. The tax rate is 30%. 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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Chapter1: Financial Statements And Business Decisions
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Depreciation and Rate of Return
Burrell Company purchased a machine for $46,000 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 $23,000
each year. The tax rate is 30%.
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
Transcribed Image Text:Depreciation and Rate of Return Burrell Company purchased a machine for $46,000 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 $23,000 each year. The tax rate is 30%. 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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