The Southern Division of WDY Corporation reported net income of $2,500, operating income of $4,000, average...
The Southern Division of WDY Corporation reported net income of $2,500, operating income of $4,000, average equity of $24,000, and average operating assets of $30,000 in a recent accounting period. If Southern’s required rate of return is 12%, its residual income was a. $380 b. $(380) c. $400 d. $1,100.
Homework Answers
| Residual Income | Operating Income - (Average operating assets × Required rate of return) |
| Residual Income | $ 4,000 - (30,000 × 12%) |
| $ 4,000 - $ 3,600 | |
| $ 400 | |
| Residual Income | C. $ 400 |
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The Southern Division of WDY Corporation reported net income of
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