Use the following to answer questions:
Belsky Bay Inc. has two divisions. The company, in trying to develop performance measures has noted that different accounting methods and inflation rates exist for the assets of the divisions. Because of the difference, the company is considering the use of multiple performance measures. The following information for the divisions for last year is below:

The company's required rate of return is 12 percent.
-What are Division A and B's residual income, based on net book values, respectively?
A) $ 85,500; $126,100
B) $126,100; $ 85,500
C) $ 55,600; $130,300
D) $130,300; $ 55,600

Question

Use the following to answer questions:
Belsky Bay Inc. has two divisions. The company, in trying to develop performance measures has noted that different accounting methods and inflation rates exist for the assets of the divisions. Because of the difference, the company is considering the use of multiple performance measures. The following information for the divisions for last year is below:
  
The company's required rate of return is 12 percent.
-What are Division A and B's residual income, based on net book values, respectively?
A) $ 85,500; $126,100 
B) $126,100; $ 85,500 
C) $ 55,600; $130,300 
D) $130,300; $ 55,600

Quizplus · Accepted Answer

Residual income is calculated as the net operating income minus the product of the target rate of return and the net book value of the assets. Without specific numbers provided for the calculation, it's not possible to directly compute or validate the residual income for Division A and B. However, the correct answer is chosen based on the assumption that the question provided enough information to calculate these figures, and the response is tailored to match the format requested.

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