Information for 2 years is presented below for this company that uses the straight-line depreciation method. Current Year Prior Year Property, plant, and equipment $ 250,000 $190,000 Accumulated depreciation 100,000 85,000 Depreciation expense 62,500 47,500 Net sales 1,000,000 900,000 Total assets 625,000 475,000 Determine the asset turnover ratio for the current year, rounded to two decimal places.
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.
Information for 2 years is presented below for this company that uses the
| Current Year | Prior Year | |
| Property, plant, and equipment | $ 250,000 | $190,000 |
| 100,000 | 85,000 | |
| Depreciation expense | 62,500 | 47,500 |
| Net sales | 1,000,000 | 900,000 |
| Total assets | 625,000 | 475,000 |
Determine the asset turnover ratio for the current year, rounded to two decimal places.
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