Question

Apparel Inc.'s 2021 income from continuing operations before income taxes was $298,000. Apparel Inc. reported before-tax income on discontinued operations of $74,000. All tax items are subject to a 25% tax rate. In its income statement for 2021, Apparel Inc. would show the following line-item amounts for income tax expense and net income:

Multiple Choice

• $279,000 and $74,500 respectively.

• $224,000 and $279,500 respectively.

• $372,000 and $316,500 respectively.

• $74,500 and $279,000 respectively.

Answer 1

Answer- Apparel Inc. would show the following line-item amounts for income tax expense and net income = $74500 and $279000 respectively.

Explanation-

Particulars		Amount
		$
Income from continuing opeartions		298000
before income taxes
Less- Income tax expense	$298000*25%	74500
Income from continuing opeartions		223500
Add- Income on discontinued operations
net of tax expenses of $18500 ($74000*25%)	($74000-$18500)	55500
Net Income		279000