Question

On June 30 Gomez Corporation discontinued its operations in Mexico. On September 1 Gomez disposed of the Mexico facility at a pretax loss of $680,000. The applicable tax rate is 25%. Show the discontinued operations section of Gomez's income statement.Discontinued OperationsLoss on disposal of Mexico facility, net of $ 170,000 tax $_____?_______

Answer 1

- $510,000

Step-by-step explanation:

Discontinued Operations:

Pretax Loss = $680,000

Applicable tax rate = 25%

After Tax Loss = Pretax Loss × (100% - Applicable tax rate)

= $680,000 × (100% - 25%)

= $680,000 × 75%

= - $510,000

Loss on Disposal of Discontinued Operations = - $510,000