Lupton Inc

question 154

Multiple Choice

Lupton Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a $160,000 loss in the year of disposal. The loss on disposal of the segment was $80,000. If the tax rate is 30%, and income before income taxes was $1,300,000,

• A) the income tax expense on the income before discontinued operations is $318,000.
• B) the income from continuing operations is $910,000.
• C) net income is $1,060,000.
• D) the losses from discontinued operations are reported net of income taxes at $240,000.

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Definitions:

Discounted Price

A reduced price below the original mark-up, often to encourage purchase or clear inventory.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including repayment terms and interest rates.

Average Inventory

The mean value of inventory held by a company over a specific period of time, calculated to assess inventory levels and management efficacy.

Carrying Cost

Expenses associated with holding inventory, including storage, insurance, and depreciation.