Question

crimson corp. has a component that is a discontinued operation. the revenues and expenses of the component were $200,000 and $240,000, respectively. the component was sold with a resulting loss of $160,000. the tax rate is 30%. what is the total gain or loss on discontinued operations (net-of-tax effects) that will be reported on the income statement? multiple choice question. $160,000 loss $140,000 loss $112,000 loss $24,000 loss

Answer 1

$94,000 gain

Step-by-step explanation:

Carol Corp total gain or loss on discontinued operation

-Revenues $200,000

-Expenses $240,000

-Components sold $160,000

Hence:

$200,000-$240,000+$160,000

= $120,000

$120,000 * net of tax 70%

= $94,000 gain

The tax rate of 30%

100%-30%=70% as the net tax rate