Major Co.reported 2016 income of $300,000 from continuing operations before income taxes and a before-tax loss on discontinued operations of $80,000.All income is subject to a 30% tax rate.In the 2016 income statement,Major Co.would show the following line-item amounts for income tax expense and net income:
A)$66,000 and $210,000.
B)$90,000 and $154,000.
C)$90,000 and $276,000.
D)$66,000 and $220,000.

Question

Quizplus · Accepted Answer

The income tax expense on continuing operations is $300,000 * 30% = $90,000. The net income is calculated as follows: $300,000 - $90,000 (tax on continuing operations) - $80,000 (loss on discontinued operations) + $24,000 (tax benefit on discontinued operations, which is $80,000 * 30%) = $154,000.

Major CoReported 2016 Income of $300,000 from Continuing Operations Before Income