During the first month of its current fiscal year, Green Co. incurred repair cos

Question

During the first month of its current fiscal year, Green Co. incurred repair costs of $22,000 on a machine that had 4 years of remaining depreciable life. The repair cost was inappropriately capitalized. Green Co. reported operating income of $159,000 for the current year. Assume that Green Co.'s total assets at the end of the prior year and at the end of the current year were $932,000 and $1,017,000, respectively. Calculate ROI (based on operating income) for the current year using the originally reported data and then using corrected data. 1. What is the Original Data ROI? 2. Corrected Data ROI?

Explanation / Answer

Hi, Answer will be = 159000/1017000 = 15.63% Corrected = 164500/1017000 = 16.18% Thanks, Aman

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