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Calculate Gandolfi ROI for the year ended December

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Reference no: EM133170501

Question - Effect of depreciation on ROI - Gandolfi Construction Co. purchased a CAT 336DL earth mover at a cost of $415,000 in January 2019. The company's estimated useful life of this heavy equipment is 20 years, and the estimated salvage value is $84,000.

Assume that Gandolfi Construction Co. calculated depreciation expense for the CAT 336DL earth mover on the straight-line method and reported $614,100 of net income for the year ended December 31, 2019. The company's average total assets for 2019 were $3,450,000.

Required -

a. Calculate Gandolfi's ROI for the year ended December 31, 2019.

b. Calculate what Gandolfi's ROI would have been for the year ended December 31, 2019, had the company used the double- declining-balance depreciation method for the CAT 336DL earth mover. Ignore the effects of income taxes.

Reference no: EM133170501

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