Information for Hobson Corp. for the current year ($ in millions): Income from continuing operations before...

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Information for Hobson Corp. for the current year ($ in millions): Income from continuing operations before...

Information for Hobson Corp. for the current year ($ in millions):


Income from continuing operations before tax	$	155
Loss on discontinued operation (pretax)		32
Temporary differences (all related to operating income):
Accrued warranty expense in excess of expense included in operating income		10
Depreciation deducted on tax return in excess of depreciation expense		25
Permanent differences (all related to operating income):
Nondeductible portion of entertainment expense		5

The applicable enacted tax rate for all periods is 25%.

How much tax expense on income from continuing operations would be reported in Hobson's income statement?

$36.25 million.
$38.75 million.
$40.0 million.
$32.5 million.

business accounting

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Answer 1

Answer #1

Tax payable = (155 - 10 - 25 + 5) * 25% = 31.25 Million

Deferred tax = (10 + 25) * 25% = 35 * 25% = 8.75 million

Total tax expense = Tax payable + Deferred tax

= 31.25 million + 8.75 million = $40 million

Answer : $40.00 Million

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Answer 2

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Information for Hobson Corp. for the current year ($ in millions): $260 60 Income from continuing...