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 after tax can be calculated as follows: 
Loss after tax = Loss before tax x (1 - tax rate)
= $80,000 x (1 - 0.25)
= $60,000
Therefore, the loss on this disposal will be reported on the income statement at $60,000.

Dandy Candy Company Sold Its Licorice Division Resulting in a Loss