Refer to the information presented in Mini- Exercise 6.3. Assume that Gandolfi Construction Co. calculated depreciation expense for the CAT 336DL earth mover on the straight-line method and reported $960,000 of net income for the year ended December 31, 2019. The company’s average total assets for 2019 were $8,000,000.

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.

Mini-Exercise 3

Stucki Holdings Corp. incurred the following expenditures: $6,100 cost to replace the transmission in a company-owned vehicle; $21,600 cost of annual property insurance on the company’s production facilities; $12,800 cost to develop and register a design patent; $22,700 cost to add a security and monitoring system to the company’s distribution center; $600 cost to repair paint damage on a company-owned vehicle caused by normal wear and tear.