Lupton Inc.disposes of an unprofitable segment of its business.The operation of the segment suffered a $200,000 loss in the year of disposal.The loss on disposal of the segment was $100,000.If the tax rate is 30%, and income before income taxes was $1,600,000,

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The income before income taxes of $1,600,000 should be adjusted for the loss on disposal of $100,000, resulting in income from continuing operations of $1,500,000. The tax expense on that amount at a rate of 30% is $450,000, which should be subtracted from the income from continuing operations to arrive at net income of $1,050,000. However, the $200,000 loss from discontinued operations should be reported net of taxes, so it would be $140,000 ($200,000 x 70% to adjust for the tax benefit). Adding that amount back to the net income gives a final net income of $1,190,000. Therefore, the correct choice is B, as it shows the income from continuing operations of $1,120,000 and the overall net income of $1,300,000 (after adding back the $180,000 loss from discontinued operations).