If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

Question

Quizplus · Accepted Answer

Residual income is calculated as the divisional income from operations minus the product of the minimum required return rate and the invested assets. Here, it would be $75,000 - ($737,500 * 6%) = $75,000 - $44,250 = $30,750.

If Divisional Income from Operations Is $75,000, Invested Assets Are