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20 March, 22:38

Residual Income The Commercial Division of Galena Company has operating income of $62,240 and assets of $228,000. The minimum acceptable return on assets is 7%. What is the residual income for the division?

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  1. 21 March, 00:36
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    the residual income for the division is $46280

    Explanation:

    given data

    operating income = $62,240

    assets = $228,000

    return on assets = 7%

    to find out

    What is the residual income for the division

    solution

    we get Residual income for the division that is express as

    Residual Income = Income from operations - (Minimum required return * Operating Assets) ... 1

    put here value we get

    Residual Income = $62,240 - (7% * $228,000)

    Residual Income = $62,240 - $15960

    Residual Income = $46280

    So the residual income for the division is $46280
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