Use the Following Information for Questions

question 51

Multiple Choice

Use the following information for questions
At Iserlohn Company, events and transactions during 2011 included the following.The tax rate for all items is 30 percent.
(1) Amortization for 2009 was found to be understated by $30,000.
(2) A strike by the employees of a supplier resulted in a loss of $20,000.(3) The inventory at December 31, 2009 was overstated by $40,000.
(4) A flood destroyed a building that had a book value of $400,000.Floods are very uncommon in that area.
-The effect of these events and transactions on 2011 income from continuing operations net of tax would be

• A)$14,000.
• B)$35,000.
• C)$63,000.
• D)$294,000.

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Definitions:

Positive Externalities

Benefits experienced by third parties or society at large as a result of an economic activity, without the third party incurring any cost.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning no one can be prevented from using them and one person's use does not reduce availability to others.

Consumer Surplus

The gap between what consumers are prepared and can afford to pay for a product or service, and what they end up paying in reality.

Producer Surplus

The difference between the amount producers are willing to accept for a good versus what they actually receive.