6. On October 28, 2018, Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31, 2018, the end of the company's fiscal year. The division's loss from operations for 2018 was $1,990,000. The division's book value and fair value less cost to sell on December 31 were $2,900,000 and $3,520,000, respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2018 income statement?

7. Major Co. reported 2018 income of $312,000 from continuing operations before income taxes and a before-tax loss on discontinued operations of $71,000. All income is subject to a 32% tax rate. In the income statement for the year ended December 31, 2018, Major Co. would show the following line-item amounts for income tax expense and net income:

a. $77,120 and $212,160 respectively.

b. $77,120 and $383,000 respectively.

c. $99,840 and $163,880 respectively.

d. $99,840 and $241,000 respectively.

8.

Howard Co.'s 2018 income from continuing operations before income taxes was $287,000. Howard Co. reported before-tax income on discontinued operations of $62,000. All tax items are subject to a 36% tax rate. In its income statement for 2018, Howard Co. would show the following line-item amounts for income tax expense and net income:

Multiple Choice

a. $103,320 and $223,360 respectively.

b. $349,000 and $309,320 respectively.

c, $225,000 and $264,680 respectively.

d. $223,360 and $103,320 respectively.

9.

Misty Company reported the following before-tax items during the current year:

Sales revenue	$	670
Selling and administrative expenses		320
Restructuring charges		30
Loss on discontinued operations		60

Misty's effective tax rate is 40%. What is Misty's income from continuing operations?

Multiple Choice

a. $192.

b. $280.

c. $320.

d. $370.

10.

Misty Company reported the following before-tax items during the current year:

Sales revenue	$	680
Selling and administrative expenses		330
Restructuring charges		60
Loss on discontinued operations		90

Misty's effective tax rate is 30%. What is Misty's net income for the current year?

Multiple Choice

a. $113.

b. $140.

c. $27.

d. None of these answer choices are correct.