Problem: Information for Hobson International Corp for the current year (millions):
Income from continuing operations before tax $150
Extraordinary loss (pretax) 30
Temporary differences (all related to operating income):
Accrued warranty expense in excess of write-offs
included in operating income 10
Depreciation deducted on tax return in excess of depreciated expense 25
Permanent differences (all related to operating income):
Nondeductible portion of travel & entertainment expense 5
The applicable enacted tax rate for all periods is 40%
How much tax on income from continuing operations would be reported in Hobson's income statement?
a. 56 million, b. 50 million, c. 62 million, d. 60 million
What is Hobson's income tax payable for the current year?
a. 48 million, b. 44 million, c. 52 million, d. 50 million
What should Hobson report as net income?
a. 88 million, b. 72 million, c. 70 million, d. 75 million