Three Years Ago,one Division of the Calsone Enterprise Company Purchased

question 97

Essay

Three years ago,one division of the Calsone Enterprise Company purchased depreciable assets costing $2,000,000.The cash flows from these assets for the past three years have been:
Calsone used the straight-line depreciation method;the estimated useful life is 10-years with no salvage value.For return on investment (ROI)calculations,Calsone uses end-of-year balances. $$\begin{array} { | l | r | } \hline \text { Year } & \text { Cash Flows } \\\hline 1 & \$ 600,000 \\\hline 2 & 700,000 \\\hline 3 & 810,000 \\\hline\end{array}$$ Required:
a.What was the ROI for each year using historical cost and gross book value?
b.What was the ROI for each year using historical cost and net book value?

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Definitions:

Improvements

Refers to the process of making something better or more effective through changes, upgrades, or enhancements.

Behaviourally Anchored Rating Scales

A performance appraisal method that uses specific examples of behavior to evaluate employees rather than abstract criteria.

Subjective Performance Measures

Assessment criteria based on personal judgments or opinions rather than on quantifiable data or objective indicators.

Management-By-Objectives

A management model that involves setting clear, specific objectives that are agreed upon by both management and employees, focusing on measurable results and feedback in performance assessment.