As the Staff Accountant for Investment Centers Beta and Gamma

question 60

Essay

As the staff accountant for Investment Centers Beta and Gamma, compute the residual income for each investment center, using the following information:
$\begin{array}{|l|l|l|}\hline & \text { Beta } & \text { Gamuna } \\\hline \text { Operating income } & \$ 850,000 & \$ 1,000,000 \\\hline \text { Actual ROI } & 28 \% & 49 \% \\\hline \text { Desired ROI } & 32 \% & 35 \% \\\hline \text { Assetsinvested } & \$ 585,000 & \$ 750,000 \\\hline\end{array}$

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Definitions:

Decrease Assets

A decrease in assets refers to a reduction in the value or quantity of the resources owned by an entity, which can result from sales, disposals, or consumption in operations.

Accounting Equation

The accounting equation is the fundamental framework of double-entry bookkeeping, stating that Assets = Liabilities + Equity, ensuring financial statements are balanced.

Liabilities

Financial obligations or debts that a company owes to external parties or entities.

Stockholders' Equity

The portion of a company's assets that is owned outright by the stockholders, calculated as the difference between total assets and total liabilities.