(SOLVED) New Life Spring Water Company recently purchased a new delivery


Question Description:

$15

New Life Spring Water Company recently purchased a new delivery truck for $100 000. Management expects the truck to generate the following additional annual revenues and expenses during its useful life.
Average incremental revenue ……………………………………………. $50 000
Average incremental expenses, not including depreciation ……………… 20 000
The truck has an expected life of six years and is depreciated using the straight-line method. Ignore any income taxes.
Required:
1 Prepare a schedule showing the incremental revenue, incremental operating expenses and incremental depreciation during each of the next six years.
2 Calculate the accounting rate of return on the delivery truck, using the initial investment as the denominator.

Answer

$15