Requirement-1
To Calculate:
The Residual income for Samsung for the year 2017
Requirement-1
Answer to Problem 3AA
The Residual income for Samsung for the year 2017 shall be19,809,453 millions of Korean won.
Explanation of Solution
The Residual income for Samsung for the year 2017 is calculated as follows:
| Samsung | |
| In millions of Korean won | Year 2017 |
| Beginning Total Assets (A) | 262,174,324 |
| Ending Total Assets (B) | 301,752,090 |
| Average Total Assets (C) = (A+B)/2 | 281,963,207 |
| Target | 12% |
| Target Income (C) =A*B = | 33,835,585 |
| Operating Income (D) | 53,645,038 |
| Residual Income (RI) = D-C = | 19,809,453 |
Concept Introduction:
Residual Income (RI):
Residual Income is the income earned over and above the expected rate of return on assets invested in the business. The formulas to calculate the Residual Income is as follows:
Return on total Assets/ Investment:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Requirement-2
To Calculate:
The
Requirement-2
Answer to Problem 3AA
The Return on investment for Samsung for the year 2017 is 19.03%
Explanation of Solution
The Return on investment for Samsung for the year 2017 is calculated as follows:
| Samsung | |
| In millions of Korean won | Year 2017 |
| Beginning Total Assets (A) | 262,174,324 |
| Ending Total Assets (B) | 301,752,090 |
| Average Total Assets (C) = (A+B)/2 | 281,963,207 |
| Operating Income (D) | 53,645,038 |
| Return on Investment (ROI) = D/C = | 19.03% |
Concept Introduction:
Residual Income (RI):
Residual Income is the income earned over and above the expected rate of return on assets invested in the business. The formulas to calculate the Residual Income is as follows:
Return on total Assets/ Investment:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Requirement-3
To Calculate:
The Return on investment for Apple for the year 2017
Requirement-3
Answer to Problem 3AA
The Return on investment for Apple for the year 2017 is 17.60%
Explanation of Solution
The Return on investment for Apple for the year 2017 is calculated as follows:
| Apple | |
| $ Millions | Year 2017 |
| Beginning Total Assets (A) | $ 321,686 |
| Ending Total Assets (B) | $ 375,319 |
| Average Total Assets (C) = (A+B)/2 | $ 348,503 |
| Operating Income (D) | $ 61,344 |
| Return on Investment (ROI) = D/C = | 17.60% |
Concept Introduction:
Residual Income (RI):
Residual Income is the income earned over and above the expected rate of return on assets invested in the business. The formulas to calculate the Residual Income is as follows:
Return on total Assets/ Investment:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Requirement-4
To Indicate:
The Company which has higher Return on investment for the year 2017
Requirement-4
Answer to Problem 3AA
Samsung Company has the higher Return on investment for the year 2017
Explanation of Solution
The Return on investment for Samsung for the year 2017 is 19.03%
The Return on investment for Apple for the year 2017 is 17.60%
Hence, Samsung Company has the higher Return on investment for the year 2017
Want to see more full solutions like this?
Chapter 24 Solutions
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
- Unit Replacement Product Quantity Unit Cost Forest Company has five products in its Inventory. Information about ending Inventory follows. Cost Unit Selling Price A 900 $ 29 $ 31 $ 35 B 900 34 30 37 C 900 22 21 27 D 900 26 23 25 E 1,000 33 31 32 The cost to sell for each product consists of a 20 percent sales commission. The normal profit for each product is 40 percent of the selling price. Required: 1. Determine the carrying value of ending Inventory, assuming the lower of cost or market (LCM) rule is applied to Individual products. 2. Determine the carrying value of Inventory, assuming the LCM rule is applied to the entire Inventory. 3. Assuming Inventory write-downs are common for Forest, record any necessary year-end adjusting entry based on the amount calculated in requirement 2. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the carrying value of ending inventory, assuming the lower of cost or market (LCM) rule is…arrow_forwardCould you explain the steps for solving this financial accounting question accurately?arrow_forwardCompute the net income or net loss for the quarter ended on June 30, 2023, from the following data: Item Assets on April 1, 2023 Liabilities on April 1, 2023 Capital on June 30, 2023 Amount $75,000 $45,000 $42,000 Additional investments by the owner during $5,000 2023 Withdrawals during 2023 $8,000arrow_forward
- 4. (i) SECTION B The following information has been obtained from the financial statements of Outer Scope Insurance Company and from discussions with the company's Budgeting and Control Accountant. claims Commissions Operating Month Gross premiums Net payable payable expenses December 2017 83,000,000 21,000,000 7,500,000 26,400,000 January 2018 88,000,000 26,200,000 8,250,000 30,500,000 February 2018 92,000,000 36,400,000 8,800,000 33,400,000 March 2018 85,000,000 29,100,000 7,900,000 28,200,000 April 2018 104,000,000 44,500,000 11,500,000 36,900,000 May 2018 94,500,000 32,000,000 9,600,000 29,350,000 June 2018 90,800,000 26,700,000 7,700,000 31,600,000 (ii) (iii) (iv) (v) (vi) The company's gross premium revenue is collected in full during the month the policies are written but includes amounts due to reinsurers. Amounts paid to the reinsurers average at 10% of the gross premium revenues and are paid out to the reinsurers in the month the policies are written. Net claims to be settled…arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.]Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm while Jessie runs a craft business from their home. Jessie’s craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. Joe and Jessie own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay for Lizzie’s college expenses (balance of $35,000). Neither Joe nor Jessie is blind or over age 65, and they plan to file as married-joint. Assume that the employer portion of the self-employment tax on Jessie’s income is $831. Joe and Jessie have summarized the income and expenses they expect to report…arrow_forwardI need assistance with this financial accounting problem using appropriate calculation techniques.arrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education