Problem 3-26 (Algo) Return on assets analysis [LO3-2] In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of deprecial assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful I 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 62.91 % % % % % b. To what do you attribute the phenomenon shown in part a? Annual depreciation charges O Increase in current assets O Increase in market share c. Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?
Problem 3-26 (Algo) Return on assets analysis [LO3-2] In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of deprecial assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful I 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 62.91 % % % % % b. To what do you attribute the phenomenon shown in part a? Annual depreciation charges O Increase in current assets O Increase in market share c. Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 8PA: Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the...
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![**Problem 3-26 (Algo) Return on Assets Analysis [LO3-2]**
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.
### Questions:
**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 | Return on Assets |
|------|-------------------|
| 2009 | 62.91 % |
| 2011 | |
| 2014 | |
| 2016 | |
| 2019 | |
**b. To what do you attribute the phenomenon shown in part a?**
- [ ] Annual depreciation charges
- [ ] Increase in current assets
- [ ] Increase in market share
**c. Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?**
### Explanation of the Graph/Table:
The table provided lists the years 2009, 2011, 2014, 2016, and 2018 alongside columns where the return on assets (ROA) percentage values need to be calculated and filled in. The only completed value in the table shows that for 2009 the return on assets was 62.91%.
When considering the effects:
- Part **a** involves computations of Return on Assets which is calculated as Net Income divided by Total Assets.
- Part **b** prompts to identify why these changes in Return on Assets might be occurring, offering options likely keyed into the fiscal practices and extrinsic growth metrics (e.g., depreciation, asset increases, market share).
- Part **c** asks for hypothetical effects of increasing the income by 10% annually, necessitating a new approach to the calculations made in **part a**.
This problem requires understanding both basic accounting principles and the specific workings of depreciation and asset management in relation to net income to solve effectively.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6962e45c-b951-4f90-90c1-3c0fc21e1490%2Fe28bc69b-a188-4f22-8758-096b8c800739%2Fasc0bf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Problem 3-26 (Algo) Return on Assets Analysis [LO3-2]**
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.
### Questions:
**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 | Return on Assets |
|------|-------------------|
| 2009 | 62.91 % |
| 2011 | |
| 2014 | |
| 2016 | |
| 2019 | |
**b. To what do you attribute the phenomenon shown in part a?**
- [ ] Annual depreciation charges
- [ ] Increase in current assets
- [ ] Increase in market share
**c. Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?**
### Explanation of the Graph/Table:
The table provided lists the years 2009, 2011, 2014, 2016, and 2018 alongside columns where the return on assets (ROA) percentage values need to be calculated and filled in. The only completed value in the table shows that for 2009 the return on assets was 62.91%.
When considering the effects:
- Part **a** involves computations of Return on Assets which is calculated as Net Income divided by Total Assets.
- Part **b** prompts to identify why these changes in Return on Assets might be occurring, offering options likely keyed into the fiscal practices and extrinsic growth metrics (e.g., depreciation, asset increases, market share).
- Part **c** asks for hypothetical effects of increasing the income by 10% annually, necessitating a new approach to the calculations made in **part a**.
This problem requires understanding both basic accounting principles and the specific workings of depreciation and asset management in relation to net income to solve effectively.
![### Financial Analysis Exercise
#### Part a.
**Compute the return on assets at year-end for the years 2009, 2011, 2014, 2016, and 2019.**
*Note: Input your answers as a percent rounded to 2 decimal places.*
| Year | Return on Assets |
|------|------------------|
| 2009 | 62.91% |
| 2011 | |
| 2014 | |
| 2016 | |
| 2019 | |
#### Part b.
**To what do you attribute the phenomenon shown in part a?**
- [ ] Annual depreciation charges
- [ ] Increase in current assets
- [ ] Increase in market share
#### Part c.
**Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?**
*Return on assets will be* ___](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6962e45c-b951-4f90-90c1-3c0fc21e1490%2Fe28bc69b-a188-4f22-8758-096b8c800739%2F8g8zrec_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Financial Analysis Exercise
#### Part a.
**Compute the return on assets at year-end for the years 2009, 2011, 2014, 2016, and 2019.**
*Note: Input your answers as a percent rounded to 2 decimal places.*
| Year | Return on Assets |
|------|------------------|
| 2009 | 62.91% |
| 2011 | |
| 2014 | |
| 2016 | |
| 2019 | |
#### Part b.
**To what do you attribute the phenomenon shown in part a?**
- [ ] Annual depreciation charges
- [ ] Increase in current assets
- [ ] Increase in market share
#### Part c.
**Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?**
*Return on assets will be* ___
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