Leaning towards highlight answers. Sulvane Co. reports income of $300,000 from c

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Leaning towards highlight answers.
Sulvane Co. reports income of $300,000 from continuing operations before income taxes and a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the year’s income statement, Sulvane would show the following line-item amounts for income tax expense and net income:
a. $66,000 and $210,000.
b. $90,000 and $154,000.
c. $90,000 and $276,000.
d. $66,000 and $220,000.


Harley Davis Inc. started its unicycle manufacturing business in 2006 by buying $200,000 worth of equipment having a 5-year estimated life and no salvage value after that time. Initially the company used double-declining-balance (DDB) depreciation on its equipment until 2009 when it changed to straight-line (S/L) depreciation. Depreciation expense for those years under both methods is presented below:

Year DDB S/L
2006 $60,000 $40,000
2007 $45,000 $40,000
2008 $30,000 $40,000

Harley Davis should report depreciation expense in 2009 of:
a. $ 0
b. $15,000
c. $ 32,500
b. $ 40,000
Leaning towards highlight answers.
Sulvane Co. reports income of $300,000 from continuing operations before income taxes and a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the year’s income statement, Sulvane would show the following line-item amounts for income tax expense and net income:
a. $66,000 and $210,000.
b. $90,000 and $154,000.
c. $90,000 and $276,000.
d. $66,000 and $220,000.


Harley Davis Inc. started its unicycle manufacturing business in 2006 by buying $200,000 worth of equipment having a 5-year estimated life and no salvage value after that time. Initially the company used double-declining-balance (DDB) depreciation on its equipment until 2009 when it changed to straight-line (S/L) depreciation. Depreciation expense for those years under both methods is presented below:

Year DDB S/L
2006 $60,000 $40,000
2007 $45,000 $40,000
2008 $30,000 $40,000

Harley Davis should report depreciation expense in 2009 of:
a. $ 0
b. $15,000
c. $ 32,500
b. $ 40,000

Explanation / Answer

Sulvane Co. reports income of $300,000 from continuing operations before income taxes and a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the year’s income statement, Sulvane would show the following line-item amounts for income tax expense and net income: d. $66,000 and $220,000. Harley Davis Inc. started its unicycle manufacturing business in 2006 by buying $200,000 worth of equipment having a 5-year estimated life and no salvage value after that time. Initially the company used double-declining-balance (DDB) depreciation on its equipment until 2009 when it changed to straight-line (S/L) depreciation. Depreciation expense for those years under both methods is presented below: Year DDB S/L 2006 $60,000 $40,000 2007 $45,000 $40,000 2008 $30,000 $40,000 Harley Davis should report depreciation expense in 2009 of: c. $ 32,500

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