Explore BrainMass

Green Co. repair cost was inappropriately capitalized

During the first month of its current fiscal year, Green Co. incurred repair costs of $21,000 on a machine that had 5 years of remaining depreciable life. The repair cost was inappropriately capitalized. Green Co. reported operating income of $165,000 for the current year.


Assuming that Green Co. took a full year's straight-line depreciation expense in the current year, calculate the operating income that should have been reported for the current year. (Round your answer to nearest whole dollar.

Operating income $


Assume that Green Co.'s total assets at the end of the prior year and at the end of the current year were $949,000 and $1,013,000, respectively. Calculate ROI (based on operating income) for the current year using the originally reported data and then using corrected data.(Round your answers to 1 decimal place. Omit the "%" sign in your response.)

Original data %
Corrected data %

Solution Summary

Your tutorial is in Excel (attached) and shows you how to fix the error and then compute the ROI. Click in cells to see computation.