Pharoah Company has a tax rate of 40 percent and income before non-operating items of $1390000. It also has the following items (gross amounts). Unusual loss $222500 Discontinued operations loss 604500 Gain on disposal of equipment 50000 Change in accounting principle increasing prior year's income 317500 What is the amount of income tax expense Pharoah would report on its income statement

Respuesta :

Answer: $245,200

Explanation:

Taxable Income = Income before non-operating items + Unusual Gain + Gain Disposal of equipment - Discontinued operation loss

= 1,390,000 + (-222,500) + 50,000 - 604,500

= $613,000

= Income tax expense = 613,000 * 40%

= $245,200