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4 May, 06:39

Freda's Florist reported the following before-tax income statement items for the year ended December 31, 2016:

Operating income $250,000

Income on discontinued operations $70,000

All income statement items are subject to a 40% income tax rate. In its 2016 income statement, Freda's separately stated income tax expense and total income tax expense would be:

$128,000 and $128,000, respectively.

$128,000 and $100,000, respectively.

$100,000 and $128,000, respectively.

$100,000 and $100,000, respectively.

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Answers (1)
  1. 4 May, 06:43
    0
    Option (C) is correct.

    Explanation:

    Income tax expense:

    = Operating income * Income tax rate

    = $250,000 * 40%

    = $100,000

    Total income tax expense:

    = (Operating income + Income on discontinued operations) * Income tax rate

    = ($250,000 + $70,000) * 40%

    = $128,000

    Therefore, Freda's separately stated income tax expense and total income tax expense would be $100,000 and $128,000, respectively.
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