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What incentives might a manager have to dispose of assets?

What incentives might a manager have to dispose of assets?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 4RE: Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020....
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Can someone please tell me if I'm on the right track, and complete the missing cells by completing the forumulas? Thank you.

Sales $55,000,000 Less: $ 38,400,000 5,700,000 Cost of goods sold Selling and administrative expense Interest expense Income before taxes 1,000,000 45,100,000 9,900,000 1,980,000 $ 7,920,000 Less income taxes Net income Other pertinent information for 2020 follows: Total assets $ 97,000,000 3,200,000 Noninterest-bearing current liabilities Required rate of return on invested capital 10% alculate NOPAT, invested capital, and ROI for LaundryMate Products. Income tax rate = $ 1,980,000 : $ 9,900,000 20% NOPAT = $ 9,900,000 +[ $ 1,000,000 x Invested capital = $ 97,000,000 $ 3,200,000 = $93,800,000 ROI = 0.00% $ 93,800,000
Transcribed Image Text:Sales $55,000,000 Less: $ 38,400,000 5,700,000 Cost of goods sold Selling and administrative expense Interest expense Income before taxes 1,000,000 45,100,000 9,900,000 1,980,000 $ 7,920,000 Less income taxes Net income Other pertinent information for 2020 follows: Total assets $ 97,000,000 3,200,000 Noninterest-bearing current liabilities Required rate of return on invested capital 10% alculate NOPAT, invested capital, and ROI for LaundryMate Products. Income tax rate = $ 1,980,000 : $ 9,900,000 20% NOPAT = $ 9,900,000 +[ $ 1,000,000 x Invested capital = $ 97,000,000 $ 3,200,000 = $93,800,000 ROI = 0.00% $ 93,800,000
Consider the following after you have completed the requirements of E12-8 above Suppose LaundryMate Products had $11,000,000 of fully depreciated equipment of which it decided to dispose. Calculate ROl after the disposal of the equipment. NOPAT = + [ x ( Adjusted invested capital = New ROI = What incentives might a manager have to dispose of assets?
Transcribed Image Text:Consider the following after you have completed the requirements of E12-8 above Suppose LaundryMate Products had $11,000,000 of fully depreciated equipment of which it decided to dispose. Calculate ROl after the disposal of the equipment. NOPAT = + [ x ( Adjusted invested capital = New ROI = What incentives might a manager have to dispose of assets?
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