Question

Information for Hobson Corp. for the current year ($ in millions): Income from continuing operations before tax $ 380 Loss on discontinued operation (pretax) 92 Temporary differences (all related to operating income): Accrued warranty expense in excess of expense included in operating income 85 Depreciation deducted on tax return in excess of depreciation expense 175 Permanent differences (all related to operating income): Nondeductible portion of entertainment expense 20 The applicable enacted tax rate for all periods is 25%. How should Hobson report tax on the discontinued operation

Answer 1

$188

Step-by-step explanation:

Income from continuing operations before tax $380

Less: Income Tax Expenses $100 [($380+$20)/25%]

Income from continuing operations $280

Less: Loss on discontinued operation (pretax) $92

Income from discontinued operations $188