ACCOUNT- Compute return on assets at year-end for
by ella | Aug 20, 2025 | Business
Problem 3-26 Return on assets analysis [LO2]
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In January 2004, the Status Quo Company was formed. Total assets were $547,000, of which $381,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $38,100 per year, and in 2004 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been $57,000 per year for each of the last 10 years. Other assets have not changed since 2004.
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| a. |
Compute return on assets at year-end for 2004, 2006, 2009, 2011, and 2013. (Use $57,000 in the numerator for each year.) (Input your answers as a percent rounded to 2 decimal places.)
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| Year |
Return on Assets |
| 2004 |
% |
| 2006 |
% |
| 2009 |
% |
| 2011 |
% |
| 2013 |
% |
| b. |
To what do you attribute the phenomenon shown in part a? |
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|
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| Increase in market share |
| Annual depreciation charges |
| Increase in current assets |
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| c. |
Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?
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| Return on assets will be (Click to select)lowerhigher. |
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