Question

1. Faisal Corporation has the following information about 2020 (all numbers are given pre-tax):

   • Recorded a $16,000 loss on the sale of a work truck
   • Sales revenue for continuing operations was $140,000
   • Operating expenses for continuing operations was $61,000
   • A fire burned the office building resulting in an uninsured loss of $40,000
   • Sold a discontinued component of the business for a gain of $34,000
   • The discontinued component reported an operating loss of $17,000 prior to being sold
   • Stock investments were sold for a realized gain of $3,000
   • Unrealized losses on available-for-sale debt securities were $5,000

   Which of the following statements is true? Assume a 25% tax rate.

   		Income from continuing operations (pre-tax) is $82,000.
   		None of the other answer choices is correct.
   		Income tax expense is $10,750.
   		Net income from continuing operations is $19,500.
   		Net income is $28,500.
   		Net income is $38,000.
   		Net income from continuing operations is $17,250.

Answer 1