Dandy Candy Company sold its licorice division resulting in a loss of $80,000. Assuming a tax rate of 25%, the loss on this disposal will be reported on the income statement at what amount?

Question

Quizplus · Accepted Answer

The loss on disposal is reported net of tax. The tax benefit from the loss is $80,000 * 25% = $20,000. Therefore, the net loss reported is $80,000 - $20,000 = $60,000.

Dandy Candy Company Sold Its Licorice Division Resulting in a Loss