# Residual income Obj. The Commercial Division of Galena Company has operating income 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?

### Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

Chapter
Section

### Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 24, Problem 5BE
Textbook Problem
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## Residual income Obj.The Commercial Division of Galena Company has operating income 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?

To determine

Ascertain the residual income of C Division.

### Explanation of Solution

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)

Ascertain the 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} =

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