Sirius,Inc.has average total assets of $300,000.The annual operating income of the company is $150,000.The target rate of return for the company is 15%.Calculate the residual income.

Question

Quizplus · Accepted Answer

RI = Operating income - Minimum acceptable operating income
 11ea8873_d547_a469_bb89_03cbd7b5680c_TB5026_00 Minimum acceptable operating income = Target rate of return × Average total assets
Minimum acceptable operating income = 15% × $300,000 = $45,000