Jacobsen Corporation prepares its financial statement applying U.S. GAAP. During its 2013 fiscal year, the company reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount: The company's income tax rate is 40%. In its 2013 income statement, Jacobsen would report income from continuing operations of:

Question

Jacobsen Corporation prepares its financial statement applying U.S. GAAP. During its 2013 fiscal year, the company reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount:  The company's income tax rate is 40%. In its 2013 income statement, Jacobsen would report income from continuing operations of:

Quizplus · Accepted Answer

The two material items need to be added back to before-tax income to arrive at income from continuing operations. Therefore, income from continuing operations will be:
Before-tax income: $620,000
Addback of material items: $80,000
Total income from continuing operations: $700,000
Income tax at 40%: $280,000
Income from continuing operations after tax: $420,000
Therefore, the correct answer is $372,000, which is income from continuing operations after tax.

Jacobsen Corporation Prepares Its Financial Statement Applying U