【正文】 Koff39。s ine tax rate for 1996 was 40%. In its yearend ine statement, what amount should Koff report as extraordinary loss under . GAAP?a.$280,000b.$0c.$700,000d.$420,00015. During January Year 3, Doe Corp. agreed to sell the assets and product line of its Hart division. The sale was pleted on January 15, Year 4 and resulted in a gain on disposal of $900,000. Hart39。s operating losses were $600,000 for Year 3 and $50,000 for the period January 1 through January 15, Year 4. Disregarding ine taxes, what amount of net gain (loss) should be reported in Doe39。s parative Year 4 and Year 3 ine statements?Year 3Year 4a.$(600,000)$850,000b.$(650,000)$900,000c.$0$250,000d.$250,000$016. On April 30, Deer Corp. approved a plan to dispose of a ponent of its business. For the period January 1 through April 30, the ponent had revenues of $500,000 and expenses of $800,000. The assets of the ponent were sold on October 15 at a loss. In its ine statement for the year ended December 31, how should Deer report the ponent39。s operations from January 1 to April 30?a.$500,000 and $800,000 should be included with revenues and expenses, respectively, as part of continuing operations.b.$300,000 should be reported as part of the loss on disposal of a ponent and included as part of continuing operations.c.$300,000 should be reported as an extraordinary loss.d.$300,000 should be reported as a loss from operations of a ponent and included in loss from discontinued operations.17. In open market transactions, Gold Corp. simultaneously sold its longterm investment in Iron Corp. bonds and purchased its own outstanding bonds. The broker remitted the net cash from the two transactions. Gold39。s gain on the purchase of its own bonds exceeded its loss on the sale of the Iron bonds. Assume the transaction to purchase its own outstanding bonds is unusual in nature and has occurred infrequently. Under . GAAP, Gold should report the:a.Effect of its own bond transaction gain in ine before extraordinary items, and report the Iron bond transaction as an extraordinary loss.b.Net effect of the two transactions as an extraordinary gain.c.Effect of its own bond transaction as an extraordinary gain, and report the Iron bond transaction loss in ine before extraordinary items.d.Net effect of the two transactions in ine before extraordinary items.18. During the current year, both Raim Co. and Cane Co. suffered losses due to the flooding of the Mississippi River. Raim is located two miles from the river and sustains flood losses every two to three years. Cane, which has been located 50 miles from the river for the past 20 years, has never before had flood losses. How should the flood losses be reported in each pany39。s ine statement under . GAAP?RaimCanea.As an extraordinary itemAs a ponent of inefrom continuing operationsb.As a ponent of inefrom continuing operationsAs a ponent of inefrom continuing operationsc.As an extraordinary itemAs an extraordinary itemd.As a ponent of inefrom continuing operationsAs an extraordinary item19. Lore Co. changed from the cash basis of accounting to the accrual basis of accounting during the current year. The cumulative effect of this change should be reported in Lore39。s current year financial statements as a:a.Prior period adjustment resulting from the correction of an error.b.Component of ine after extraordinary item.c.Prior period adjustment resulting from the change in accounting principle.d.Component of ine before extraordinary item.20. Which of the following should be included in general and administrative expenses?InterestAdvertisinga.NoYesb.NoNoc.YesNod.YesYes21. Under . GAAP, a material loss should be presented separately as a ponent of ine from continuing operations when it is:a.Not unusual in nature but infrequent in occurrence.b.A cumulative effect type change in accounting principle.c.Unusual in nature and infrequent in occurrence.d.An extraordinary item.22. On October 1, 20X4, Host Co. approved a plan to dispose of one of the pany39。s operating segments. Host expected that the sale would occur on April 1, 20X5 at an estimated gain of $350,000. The segment had actual and estimated operating losses as follows:1/1/X4 to 9/30/X4$(300,000)10/1/X4 to 12/31/X4(200,000)1/1/X5 to 3/31/X5(400,000)In its 20X4 ine statement, what should Host report as a loss from discontinued operations before ine taxe