Exercise 14-45 (Algo) Compare Historical Cost, Net Book Value to Gross Book Value (LO 14-2, 5) The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $36.5 million and having a four-year expected life, after which the assets can be salvaged for $7.3 million. In addition, the division has $36.5 million in assets that are not depreciable. After four years, the division will have $36.5 million available from these non depreciable assets. This means that the division has invested $73 million in assets with a salvage value of $43.8 million. Annual operating cash flows are $12.1 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value for each year. Note: Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.10). Year 1 Year 2 Year 3 Year 4 ROI Net Book Value Gross Book Value % % % % % % % %

Exercise 14-45 (Algo) Compare Historical Cost, Net Book Value to Gross Book Value (LO 14-2, 5) The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $36.5 million and having a four-year expected life, after which the assets can be salvaged for $7.3 million. In addition, the division has $36.5 million in assets that are not depreciable. After four years, the division will have $36.5 million available from these non depreciable assets. This means that the division has invested $73 million in assets with a salvage value of $43.8 million. Annual operating cash flows are $12.1 million. In computing ROI, this division uses end-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value for each year. Note: Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.10). Year 1 Year 2 Year 3 Year 4 ROI Net Book Value Gross Book Value % % % % % % % %

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2.5P

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