Tableau Dashboard Activity $9-2($Static$)$ Comparing Depreciation Methods and Calculating the Fixed Asset Turnover Ratio $[$LO $9-3,$ LO $9-5,$ LO $9-8]$

The Guerra brothers, Noah and Alexander, are partners in a real estate business. They own a small office building outside of Miami, Florida. They bought the building three years ago at a cost of $$1,750,000.$ For the past three years, they have rented out office space in the building. The table below provides the partnership's net revenue for each year.

$\backslash$table$[[,$Year $1,$ Year $2$ Year $3],[$Net Revenue,$]]$

When the brothers purchased the building, they decided to record depreciation using the straight$-$line method. Now, the brothers are thinking about selling the building and they wonder whether they would have been better off using the double$-$declining$-$balance method instead. Alexander has put together the Tableau dashboard below to understand the effects of choosing straight$-$line versus double$-$declining$-$balance. Use the dashboard to answer the following questions.

Depreciation Expense and Accumulated Depreciation

Required:

The office building is the only fixed asset that the partnership currently owns. Calculate the fixed asset turnover ratio for Year $3,$ given that the partnership uses the straight$-$line method. What would be the fixed asset turnover ratio for Year $3$ if the partnership had used the double$-$declining$-$balance method instead? Does the ratio appear better under the straight$-$line method or the double$-$declining$-$balance method?

If the brothers have assumed that the building has no residual value, what is the estimated useful life of the building?

Assume that the brothers decide to sell the building for $$1\mathrm{.}4$ million at the end of Year $3.$ Calculate the gain $($loss$)$ on disposal given that the partnership has been using the straight$-$line method. What would be the gain $($loss$)$ on disposal if the partnership had been using the double$-$declining$-$balance method? Where will the partnership report the "gain $($loss$)$ on disposal" in its financial statements?

Based on your answers above, would the brothers have been better off using the double$-$declining$-$balance method instead of the straight$-$line method?