Explain how to calculate total asset turnover

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Question

On April 1, Year 5 a company discarded a machine that had cost $10,000 and had accumulated depreciation of $8,000 as of December 31, Year 4. The asset had a 5-year life and no salvage value. Prepare the journal entries to record the updating of the depreciation expense and discarding of this asset in Year 5.

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

Reference no: EM132321921

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