Question

Carla Vista Co. has a tax rate of 30% and income before non-operating items of $1392000. It also has the following items (gross amounts). Unusual loss $222000 Discontinued operations loss 605000 Gain on disposal of equipment 46500 Change in accounting principle increasing prior year's income 317500What is the amount of income tax expense Carla Vista would report on its income statement?A. $162,400.B. $185,600.C. $124,000.D. $198,400.

Answer 1

Answer: $364950

Step-by-step explanation:

Based on the scenario and information that have been provided in the question, the amount of income tax expense that Carla Vista would report on its income statement will be calculated as:

= (Income before non-operating items - Unusual loss + Gain on disposal of equipment) × Tax rate

= ($1392000 - $222000 + $46500) × 30%

= $1216500 × 0.3

= $364950