1.Suppose a firm had an extraordinary loss of $300,000. If the firm’s tax rate i

Question

1.Suppose a firm had an extraordinary loss of $300,000. If the firm’s tax rate is 35%, how will the loss be shown in the financial statement?
•A On the income statement, below income from operations, net of tax savings, for a net loss of $195,000.
•B On the income statement as part of the calculation of income from operations, before taxes, for a loss of $300,000.
•C As supplementary information in the notes to the financial statements.
•D As a cash outflow from financing on the statement of cash flows

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Explanation / Answer

.Suppose a firm had an extraordinary loss of $300,000. If the firm’s tax rate is 35%, how will the loss be shown in the financial statement? •A On the income statement, below income from operations, net of tax savings, for a net loss of $195,000. Extraordinary Loss is one of its kind due to natural calamities like Earthquake etc which isnot likely to recur year after year. It is Shown along with Income/Loss from Discontd operations

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