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147.Alpha’s Bunny Barn has experienced a $60,000 loss due to

Question : 147.Alpha’s Bunny Barn has experienced a $60,000 loss due to : 1312003

 

 

147.Alpha’s Bunny Barn has experienced a $60,000 loss due to tornado damage to its inventory. Tornados have never before occurred in this area. Assuming that the company’s tax rate is 30%, what amount will be reported for this loss on the income statement?

a.$60,000

b.$42,000

c.$18,000

d.$54,000

 

 

148.Wing Company reported income before taxes of $900,000 and an extraordinary loss of $250,000. Assume that the company’s tax rate is 30%. What amounts will be reported on the income statement for income before irregular items and extraordinary items, respectively?

a.$630,000 and $250,000

b.$630,000 and $175,000

c.$650,000 and $250,000

d.$650,000 and $175,000

 

 

149.Krug Corporation has income before taxes of $900,000 and an extraordinary gain of $300,000. If the income tax rate is 25% on all items, the income statement should show income before irregular items and extraordinary items, respectively, of

a.$600,000 and $300,000.

b.$600,000 and $225,000.

c.$675,000 and $300,000.

d.$675,000 and $225,000.

 

 

150.Hook Inc. has an investment in available-for-sale securities of $80,000. This investment experienced an unrealized loss of $5,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be

a.no effect.

b.$80,000 increase.

c.$28,000 decrease.

d.$5,000 decrease.

 

 

151.The disposal of a significant component of a business is called

a.a change in accounting principle.

b.an extraordinary item.

c.an other expense.

d.discontinued operations.

 

 

152.ACME Company reports income before income taxes of $2,400,000 and had an extra-ordinary loss of $800,000. If the tax rate is 30%,

a.the income before the extraordinary item is $1,920,000.

b.the extraordinary loss would be reported on the income statement at $800,000.

c.the income before the extraordinary item is $1,680,000.

d.the extraordinary loss will be reported at $240,000.

 

 

153.Eaton, Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a $360,000 loss in the year of disposal. The loss on disposal of the segment was $180,000. If the tax rate is 30%, and income before income taxes was $2,250,000,

a.the income tax expense on the income before discontinued operations is $513,000.

b.the income from continuing operations is $1,575,000.

c.net income is $1,710,000.

d.the losses from discontinued operations are reported net of income taxes at $270,000.

 

 

154.Each of the following is an extraordinary item except the

a.effects of major casualties, if rare in the area.

b.effects of a newly enacted law or regulation.

c.expropriation of property by a foreign government.

d.losses attributable to labor strikes.

 

 

155.The discontinued operations section of the income statement refers to

a.discontinuance of a product line.

b.the income or loss on products that have been completed and sold.

c.obsolete equipment and discontinued inventory items.

d.the disposal of a significant segment of a business.

 

 

156.Which one of the following would be classified as an extraordinary item?

a.Expropriation of property by a foreign government

b.Losses attributed to a labor strike

c.Write-down of inventories

d.Gains or losses from sales of equipment

 

 

 

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