If plant assets of a manufacturing company are sold at a gain of $1,800,000 with relatedtaxes of $540,000, and the gain is not considered unusual or infrequent, the incomestatement for the period would disclose these effects asa. a gain of $1,800,000 and an increase in income tax expense of $540,000. b. operating income net of applicable taxes, $1,260,000. c. a prior period adjustment net of applicable taxes, $1,260,000. d. a discontinued operations gain net of applicable taxes, $1,260,000.

Question

Karly Rivera

Business

19 January, 18:13

If plant assets of a manufacturing company are sold at a gain of $1,800,000 with relatedtaxes of $540,000, and the gain is not considered unusual or infrequent, the incomestatement for the period would disclose these effects asa. a gain of $1,800,000 and an increase in income tax expense of $540,000. b. operating income net of applicable taxes, $1,260,000. c. a prior period adjustment net of applicable taxes, $1,260,000. d. a discontinued operations gain net of applicable taxes, $1,260,000.

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Daniel Humphrey · Answer 1

a gain of $1,800,000 and an increase in income tax expense of $540,000.

Explanation:

If plant assets of a manufacturing company are sold at a gain of $1,800,000 with related taxes of $540,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as a gain of $1,800,000 and an increase in income tax expense of $540,000.

Companies report capital gains of $1,800,000 and it's tax of $540,000; at the end of every period on the Income statement.

Capital gains are generally included in taxable income although they are taxed at a lower rate.

The amount of $1,800,000 is shown in full as gain on asset disposal