A company reported the following results of its operations for 2006: $$\begin{array} { | l | l | }
\hline \text { Loss trom discontinued operations (pre-tas) } & \$ 9,000 \
\hline \text { Net income (atter tax) } & 32,600 \
\hline \text { ncome tax rate } & 40 \% \
\hline
\end{array}$$ Income from continuing operations was:
A) $32,600.
B) $27,200.
C) $41,600.
D) $38,000.

Question

A company reported the following results of its operations for 2006: $$\begin{array} { | l | l | } 
\hline \text { Loss trom discontinued operations (pre-tas) } & \$ 9,000 \
\hline \text { Net income (atter tax) } & 32,600 \
\hline \text { ncome tax rate } & 40 \% \
\hline
\end{array}$$ Income from continuing operations was:
A) $32,600.
B) $27,200.
C) $41,600.
D) $38,000.

Quizplus · Accepted Answer

To find income from continuing operations, add back the after-tax loss from discontinued operations to net income. The after-tax loss is $9,000 * (1 - 0.40) = $5,400. So, $32,600 + $5,400 = $38,000.

A Company Reported the Following Results of Its Operations for 2006