Information income from continuing operations before taxes is $790,000, in 2007
1st: Uninsured flood loss in the amount of $80,000 (this is an extraordinary item, I know that) and it would go under the net income after I compute expenses ect, however it states tax rate on this item is 46% (on the flood loss) I thought extraordinary items got a tax deduction. So how do I compute the item with tax, or what do I do?
2nd: At the beginning of 2005 the corp. purchases a machine for $54,00 (salv. val $9000) with a useful life of 6 years. The bookkeeper used straight-line dep. for 2005, 2006, and 2007 but failed to deduct the savage value in computing the depreciation base.
I know that that gives a $1500 over depreciation expense for each year, how do I record this transaction on the income statement? Its a correction of error, but would have understate income previous years, right?