In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been $43,000 per year each of the last 10 years. Other assets have not changed since 2009. a. Compute return on assets at year-end for 2009, 2011, 2014, 2016 and 2018 Note: Input your answers as a percent rounded to 2 decimal places. Year 2009 2011 2014 2016 2019 Return on Assets % % % % b. To what do you attribute the phenomenon shown in parte Increase in current assets Annual depreciation charges Increase in market share c. Now assume income increased by 10 percent each year. What effect would this have on your answers to perte?
In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been $43,000 per year each of the last 10 years. Other assets have not changed since 2009. a. Compute return on assets at year-end for 2009, 2011, 2014, 2016 and 2018 Note: Input your answers as a percent rounded to 2 decimal places. Year 2009 2011 2014 2016 2019 Return on Assets % % % % b. To what do you attribute the phenomenon shown in parte Increase in current assets Annual depreciation charges Increase in market share c. Now assume income increased by 10 percent each year. What effect would this have on your answers to perte?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of depreciable fixed
assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful lives of
10 years. Aftertax Income has been $43,000 per year each of the last 10 years. Other assets have not changed since 2009.
a. Compute return on assets at year-end for 2009, 2011, 2014, 2016 and 2018
Note: Input your answers as a percent rounded to 2 decimal places.
Year
2009
2011
2014
2016
2019
Return on Assets
%
%
%
%
b. To what do you attribute the phenomenon shown in part a
Increase in current assets
Annual depreciation charges
Increase in market share.
Return on assets will be
4
c. Now assume income increased by 10 percent each year. What effect would this have on your answers to perta?
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