Schatz Corporation Generated $8,083,000 Ordinary Business Income and Recognized a $73,900

question 63

Multiple Choice

Schatz Corporation generated $8,083,000 ordinary business income and recognized a $73,900 net capital gain on the sale of assets.Which of the following statements is true?

• A)Schatz must pay tax at the regular corporate rate on $8,156,900 taxable income.
• B)Schatz must pay tax at the regular corporate rate on $8,083,000 taxable income.The $73,900 capital gain is eligible for a preferential tax rate.
• C)Schatz's net capital gain results in a permanent book/tax difference.
• D)None of the above is true.

---

Definitions:

Basic EPS

Basic Earnings Per Share, a calculation that shows how much earnings are available to common stockholders, on a per-share basis.

Sustainable Earnings

Earnings resulting from the core operations of a company, expected to continue into the future without significant variation.

Equity Change

Refers to the movement in a company’s equity value over a period of time due to factors like earnings, share buybacks, and dividends.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, encompassing all gains and losses that affect shareholders' equity but are not included in net income.