Why Is an Adjustment Made to Assets When Determining Residual

Multiple Choice

Why is an adjustment made to assets when determining residual income?

A) The assets to which these relate have no financing cost associated with them.
B) The company incurs financing costs, which is not within divisional managers' control.
C) This amount is not controllable by the managers being evaluated.
D) Only assets that incur no interest costs are included as part of invested capital.