3.Ritchie Company sold some fixed assets for a gain of $100,000. The firm’s tax

Question

3.Ritchie Company sold some fixed assets for a gain of $100,000. The firm’s tax rate is 25%. How would Ritchie Company report this transaction on it’s financial statements?
•A On the income statement as part of the calculation of income from continuing operations, net of tax, in the amount of $75,000.
•B As an extraordinary item, net of tax, in the amount of $75,000.
•C As discontinued operations, net of tax, in the amount of $75,000.
•D On the income statement as part of the calculation of income from continuing operations at the before tax amount of $100,000.

MULTIPLE CHOICE SHOW WORK

Explanation / Answer

Ritchie Company sold some fixed assets for a gain of $100,000. The firm’s tax rate is 25%. How would Ritchie Company report this transaction on it’s financial statements? •A On the income statement as part of the calculation of income from continuing operations, net of tax, in the amount of $75,000. Sale of assets during course of business is a normal activity & will be reported as in 'A' above

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