Question
Carriage Incorporated manufactures horse carriages. The company has two divisions, Wheels and Assembly. Because of different accounting methods and inflation rates, the company is considering
Carriage Incorporated manufactures horse carriages. The company has two divisions, Wheels and Assembly. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2018:
| ASSETS | INCOME | |||
| Book Value | Current value | Book value | Current value | |
| Wheels | $ 495 comma 000$495,000 | $ 570 comma 000$570,000 | $ 130 comma 000$130,000 | $ 145 comma 000$145,000 |
| Assembly | $ 750 comma 000$750,000 | $ 1 comma 500 comma 000$1,500,000 | $ 165 comma 000$165,000 | $ 195 comma 000$195,000 |
The company is currently using a
1212%
required rate of return. What are Wheels's and Assembly's residual incomes based on book values, respectively?
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ISE Managerial Accounting
Authors: Ray H. Garrison, Eric Noreen, Peter C. Brewer
17th Edition
1260575683, 9781260575682
