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.

Question

Business

Kaylynn Conrad

30 October, 13:14

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.

+4

Answers (1)

Know the Answer?

Galloway · Answer 1

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.