Alpha's Bunny Barn has experienced a $60,000 loss due to tornado damage to its inventory.Tornados have never before occurred in this area.Assuming that the company's tax rate is 30%, what amount will be reported for this loss on the income statement?

Question

Quizplus · Accepted Answer

The loss will be reported net of tax effects. The tax savings from the loss is $60,000 * 30% = $18,000. Therefore, the net loss reported on the income statement is $60,000 - $18,000 = $42,000.

Alpha's Bunny Barn Has Experienced a $60,000 Loss Due to Tornado