# Residual income The Consumer Division of Galena Company has income from operations of $12,680,000 and assets of$74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the division?

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 24, Problem 24.5APE
Textbook Problem

## Residual income The Consumer Division of Galena Company has income from operations of $12,680,000 and assets of$74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the division?

Expert Solution
To determine

Residual income: The remaining income from operations after deducting the desired acceptable income is referred to as residual income.

Formula of residual income:

 Income from operations XXX Less minimum acceptable income from operations as a percent of invested assets XXX Residual income XXX

Table (1)

To determine: Residual income of C Division

### Explanation of Solution

Determine residual income of C Division.

Step 1: Compute minimum acceptable income from operations as a percent of invested assets for C Division.

Minimum acceptable income from operations as a percent of invested assets} = {Invested assets × Minimum acceptable return on assets

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