Major Co. reported 2013 income of $300,000 from continuing operations before income taxes and a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the 2013 income statement, Major Co. would show the following line-item amounts for income tax expense and net income:

Question

Quizplus · Accepted Answer

Income tax expense is calculated on income from continuing operations: $300,000 * 30% = $90,000. Net income is calculated as income from continuing operations after tax minus the extraordinary loss after tax: ($300,000 - $90,000) - ($80,000 * (1 - 0.30)) = $154,000.

Major Co Reported 2013 Income of $300,000 from Continuing Operations Before