The management of Hammer Enterprises shares in a bonus that is determined and paid at the end of each year. The amount of the bonus is based on 12% of net income from continuing operations. The bonus is not used in the calculation of income from continuing operations. During 2010, Hammer was sued and was ordered to pay $480,000 over and above the amount covered by insurance. The loss is tax deductible and the company's tax rate is 35%. The company was last involved in a lawsuit five years ago. Net income from continuing operations (before tax for 2010, excluding the lawsuit loss was $750,000.
What would management's 2010 bonus be if the lawsuit is considered extraordinary?
a. $90,000
b. $57,600
c. $32,400
d. $58,500

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The Answer of The management of Hammer Enterprises shares in a bonus that is determined and paid at the end of each year. The amount of the bonus is based on 12% of net income from continuing operations. The bonus is not used in the calculation of income from continuing operations. During 2010, Hammer was sued and was ordered to pay $480,000 over and above the amount covered by insurance. The loss is tax deductible and the company's tax rate is 35%. The company was last involved in a lawsuit five years ago. Net income from continuing operations (before tax for 2010, excluding the lawsuit loss was $750,000.
What would management's 2010 bonus be if the lawsuit is considered extraordinary?
a. $90,000
b. $57,600
c. $32,400
d. $58,500

The Management of Hammer Enterprises Shares in a Bonus That