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Kaiser Corporation sold its Telecommunications Division during 2010. The company's accountants determined that the division earned $850,000 of pre-tax income during 2008 prior to disposal. The sale resulted in a $370,000 loss before taxes. Kaiser's income from continuing operations for 2008 amounted to $4,138,000. The company's effective tax rate is 35%.
-The amount of extraordinary items that would appear on the 2010 income statement of Kaiser Corporation is:
A)$0
B)$312,000
C)$552,500
D)$850,000

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Kaiser Corporation sold its Telecommunications Division during 2010. The company's accountants determined that the division earned $850,000 of pre-tax income during 2008 prior to disposal. The sale resulted in a $370,000 loss before taxes. Kaiser's income from continuing operations for 2008 amounted to $4,138,000. The company's effective tax rate is 35%.
-The amount of extraordinary items that would appear on the 2010 income statement of Kaiser Corporation is:
A)$0
B)$312,000
C)$552,500
D)$850,000

Quizplus · Accepted Answer

Since the sale of the Telecommunications Division was not an extraordinary item, there would be no amount reported as an extraordinary item on the income statement for 2010.

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