Answer:
Residual Income = $6,000
Explanation:
Residual income is the excess income of a firm leftover the opportunity cost of capital or over the desired income.
Given,
The minimum rate of return 12%
Average operating assets = $300,000
Net operating income = $42,000
We know,
Residual Income = Net Operating Income - (Average operating assets x the minimum rate of return)
Residual Income = $42,000 - ($300,000 x 12%)
Residual Income = $42,000 - $36,000
Residual Income = $6,000
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Answer:A tax-deferred savings plan is an investment account that allows a taxpayer to postpone paying taxes on the money invested until it is withdrawn after retirement. The best-known such plans are Individual Retirement Accounts (IRAs) and 401(k) plans.
Explanation:
Answer:
The correct answer is D. Materiality levels for particular classes of transactions, account balances, or disclosures might also need to be revised.
Explanation:
The need for less materiality for significant account / disclosure may occur infrequently; however, it may be appropriate in certain circumstances. The materiality of performance related to a lower materiality for the significant account / disclosure is set to reduce to an adequately low level the probability that the sum of the errors not corrected and not detected in that significant account or particular disclosure exceeds the materiality Minor account / significant disclosure.
We must document the minor amount of the materiality of the significant account / disclosure, if applicable, for each specific significant account or disclosure and the factors considered in its determination.
Materiality Modification
The materiality for the financial statements taken together (and, if applicable, the lower materiality for the significant account / disclosure) may be modified as a result of:
- A change in circumstances that occurred during the audit. New information, or
- A change in our understanding of the entity and its operations as a result of performing additional audit procedures.
