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17 November, 15:34

The following information pertains to Maynard Corporation's income statement for the 12 months just ended. The company has an effective income tax rate of 40%. Discontinued operations $70,000Extraordinary loss due to earthquake 90,000Income from continuing operations (net of tax) 72,000Cumulative effect of change in accounting principle 60,000Maynard's net income for the year is:A. $8,000B. $24,000C. $12,000D. $36,000

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  1. 17 November, 19:11
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    (B) $24000

    Explanation:

    Calculate Maynard income for the year

    Income from continued operations

    (net of tax) ... $72000

    Discontinued operation - $70,000 - > 0.40 = $42,000

    Extraordinary loss due to earthquake - $90,000 - > 0.40 = $54,000

    Net income = $54,000 + $42,000 - $72,000 = $24,000
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