Residual Income The income from operations and the amount of invested assets in each division...
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Accounting
Residual Income
The income from operations and the amount of invested assets in each division of Beck Industries are as follows:
| Income from Operations | Invested Assets | |||
| Retail Division | $90,000 | 500,000 | ||
| Commercial Division | 119,700 | 570,000 | ||
| Internet Division | 67,600 | 520,000 | ||
Assume that management has established a 10% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
| Retail Division | Commercial Division | Internet Division | |||||||
| Income from operations | $90,000 | $119,700 | $67,600 | ||||||
| Minimum acceptable of income from operations | |||||||||
| Residual income | |||||||||
b. Which division has the most residual income? Commercial Division
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