Answer the Following Question(s)using the Information Below

question 62

Multiple Choice

Answer the following question(s) using the information below:
Carriage Ltd.manufactures baby 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 the year just ended:
The company is currently using a 12% required rate of return.
-What are Wheels's and Assembly's residual incomes based on current values, respectively?

• A)$70,000; $28,500
• B)$94,000; $28,500
• C)$94,000; $70,000
• D)$28,500; $94,000
• E)$61,800; $70,000

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Definitions:

Asset Approach

A valuation method that estimates a company's value based on the total value of its assets minus its liabilities.

Liability Approach

A method in accounting that emphasizes recording all financial liabilities at their current value to ensure accurate financial reporting.

Deferred Income Tax Asset

A financial statement item that refers to taxes that have been accrued but not yet paid, which is considered a company asset because it indicates future tax payments that are lower than the current tax expense.

Income Before Taxes

A financial measure indicating the profitability of a company before accounting for income taxes.