When the Bronx Company Formed Three Divisions a Year Ago,the

question 99

Essay

When the Bronx Company formed three divisions a year ago,the president told the division managers an annual bonus would be given to the most profitable division.The bonus would be based on either the return on investment or residual income of the division.Investment is to be measured using gross book value (GBV)or net book value (NBV).The following data are available:

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Definitions:

Capital Account

An account showing the net changes in property ownership and transfer of payment among countries for international transactions, or in a company's context, represents the stake of owners in the firm.

Revenue Accounts

Accounts that record the income generated from the sale of goods and services, before any expenses are subtracted.

Income Summary

A temporary account used in the closing process that summarizes a company's revenues and expenses for the accounting period.

Revenue Account(s)

Accounts that track the income generated from the sale of goods or provision of services before any expenses are deducted.