Final Answer:
The of the following items would be reported net of tax on the face of the income statement is c. Prior period adjustments
Step-by-step explanation:
On the face of the income statement, items are typically reported net of tax when they relate to adjustments from prior periods, such as prior period adjustments. Prior period adjustments involve correcting errors in the financial statements from previous reporting periods. These adjustments account for mistakes made in recognizing revenue, expenses, or other financial elements in earlier financial statements. The net of tax reporting ensures that the impact of these adjustments considers the tax effect, providing a more accurate representation of the company's financial performance.
When a company identifies an error in its financial statements from a previous period, it adjusts the amounts to rectify the mistake. The tax effect is then calculated and applied to these adjustments. The net amount, reflecting the correction and its associated tax impact, is reported on the face of the income statement. This practice aligns with the principle of providing transparent and accurate financial information to stakeholders, allowing them to understand the true financial position of the company after accounting for prior period adjustments and their tax implications.
In contrast, items such as unusual gains, changes in estimates related to allowances, and discontinued operations are typically reported before tax, providing a clearer picture of the company's operating performance and exceptional events without the confounding impact of taxes. Therefore, these items are not reported net of tax on the face of the income statement.
So correct option is c. Prior period adjustments