Use the following information for questions For Pear Limited, events and transactions during 2015 included the following.The tax rate for all items is 30%. 1)Depreciation for 2014 was found to be understated by $30,000. 2)A strike by the employees of a supplier resulted in a loss of $20,000. 3)The inventory at December 31, 2013 was overstated by $40,000. 4)A flood destroyed a building that had a book value of $400,000.Floods are very uncommon in that area.
-The effect of these events and transactions on 2015 income from continuing operations net of tax would be
A)$14,000.
B)$35,000.
C)$63,000.
D)$294,000.

Question

Quizplus · Accepted Answer

The strike loss of $20,000 is the only item affecting 2015 income from continuing operations. After tax, this is $20,000 * (1 - 0.30) = $14,000.

Use the Following Information for Questions for Pear Limited, Events