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Forums › ACCA Forums › ACCA APM Advanced Performance Management Forums › Divisional performance measurement.
How come residual income with annuity depreciation be a suitable management response for divisional managers withholding investment (or short term attitude) in assets. Is it because by using annuity depreciation it charges lesser depreciation during the beginning of the project and thus increases the profits?
And how come residual income which uses imputed interest (by definition) be a suitable management response for managers who tend to make non goal congruent decisions by making investment. Is it because here the head office has the control over the imputed interest rate and thus make it to reflect the level of risk in the investment?