The Commercial Division of Herring Company has income from operations of $420,000 and assets of $910,000

The Commercial Division of Herring Company has income from operations of $420,000 and assets of $910,000. The minimum acceptable rate of return on assets is 8%. What is the residual income for the division?

Answer:
Income from operations…………………………………………………………………… $420,000
Less:  Minimum acceptable income from operations as a
    percent of assets ($910,000 × 8%)………………………………………………………     72,800
Residual income…………………………………………………………………………… $347,200