Table 14-7 Corporate Income Statement
For the year 2017, Foxmore Company reports the following items as part of its financial results:
$\begin{array}{|l|r|}
\hline\text { Sales revenues from regular business operations } & \$ 3,000,000 \
\hline \text { Cost of goods sold } & 900,000 \
\hline \text { Operating expenses from regular business operations } & 600,000 \
\hline \text { Gain on disposal of several items of property, plant, and } &\\text { equipment }&15,000\\hline \text { Income tax rate } & 25 \% \
\hline \text { Loss on the termination of a discontinued business } & \
\text { segment } & 120,000 \\hline \text { Losses on damage caused by earthquake } & 280,000\\hline
\end{array}$
-Refer to Table 14-7.How much is the income/(loss_from continuing operations,after tax?

Question

Table 14-7 Corporate Income Statement
For the year 2017, Foxmore Company reports the following items as part of its financial results:
 $\begin{array}{|l|r|}
\hline\text { Sales revenues from regular business operations } & \$ 3,000,000 \
\hline \text { Cost of goods sold } & 900,000 \
\hline \text { Operating expenses from regular business operations } & 600,000 \
\hline \text { Gain on disposal of several items of property, plant, and } &\\text { equipment }&15,000\\hline \text { Income tax rate } & 25 \% \
\hline \text { Loss on the termination of a discontinued business } & \
\text { segment } & 120,000 \\hline \text { Losses on damage caused by earthquake } & 280,000\\hline
\end{array}$
-Refer to Table 14-7.How much is the income/(loss_from continuing operations,after tax?

Quizplus · Accepted Answer

Income from continuing operations before tax is calculated as follows: Sales revenues ($3,000,000) - Cost of goods sold ($900,000) - Operating expenses ($600,000) + Gain on disposal ($15,000) = $1,515,000. After applying the income tax rate of 25%, the income from continuing operations after tax is $1,515,000 - ($1,515,000 * 25%) = $1,515,000 - $378,750 = $1,136,250. However, losses from discontinued operations and extraordinary items like earthquake damage are not included in continuing operations. Therefore, the correct calculation for income from continuing operations after tax is $1,136,250, which is not an option provided, indicating a mistake in the calculation or the interpretation of the options. The closest correct option based on the provided calculation method is D) $926,250, which suggests there might have been an error in the calculation process described.

Table 14-7 Corporate Income Statement for the Year 2017, Foxmore

Table 14-7 Corporate Income Statement
for the Year 2017, Foxmore