HW #2 Solution

HW #2 Solution - ACCT 401 Lab Homework #2 Name_ 1. Arreaga...

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Name_______________________ 1. Arreaga Corp. has a tax rate of 40 percent and income before non-operating items of $464,000. It also has the following items (gross amounts). Unusual loss $ 74,000 Extraordinary loss 202,000 Gain on disposal of equipment 16,000 Change in accounting principle increasing prior year's income 106,000 What is the amount of income tax expense Arreaga would report on its income statement? a. $185,600 b. $162,400 c. $198,400 d. $124,000 2. At Ruth Company, events and transactions during 2012 included the following. The tax rate for all items is 30%. (1) Depreciation for 2010 was found to be understated by $60,000. (2) A strike by the employees of a supplier resulted in a loss of $50,000. (3) The inventory at December 31, 2010 was overstated by $80,000. (4) A flood destroyed a building that had a book value of $1,000,000. Floods are very uncommon in that area. The effect of these events and transactions on 2012 net income net of tax would be
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This note was uploaded on 03/20/2012 for the course ACCT 401 taught by Professor Winchel during the Spring '10 term at South Carolina.

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HW #2 Solution - ACCT 401 Lab Homework #2 Name_ 1. Arreaga...

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