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Information for Hobson Corp. for the...

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Accounting

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Information for Hobson Corp. for the current year ($ In millions) Income from continuing operations before tax $290 10 Loss on discontinued operation (pretax) Temporary differences (all related to operating income): Accrued varranty expense in excess of expense included in operating income 20 15 10 Depreciation deducted on tax return in excess of depreciation expense Permanent differences (all related to operating income): Nondeductible portion of entertainnent expense The applicable enacted tax rate for all periods is 40%. How should Hobson report tax on the discontinued operation? Multiple Choice A defered tax asset of $4 million in the balence sheet A sax beneft of 54 miion to net acsinst the $10 millon pretax loss 0 Permanen terences tall selaced Ll Felated to bplratiig e Nondeductible portion of entertainnent expense 10 The applicable enacted tax rate for all periods is 40%. How should Hobson report tax on the discontinued operation? Multiple Choice A deferred tax asset of $4 million in the balance sheet A tax beneft of $4 million to net against the $10 million pretax loss A tax recelvable of $4 million in the balance sheet None of these answer choices are correct 0 8 4 0

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