Accounting records from Division A of Alpha Manufacturing Company (an investment center, where performance is measured using Economic Value Added) indicate the following:

Divisional Sales	$1,500,000
Average investment	$1,000,000
Divisional operating income	$170,000
Weighted average cost of capital	14%

In addition to the above accounting records, Division A has $240,000 in intangible assets. Review of the accounting records also shows that an unusual $25,000 loss was included in the calculated divisional income.

Required:

1. Intangible assets will mean what adjustment in the EVA calculation?

2. The unusual loss will mean what adjustment in the EVA calculation?

3. Calculate the EVA.

Answer rating: 100% (QA)

EVA means the economic value profit of any project which is used to measure the real economic value ... View the full answer