What the effect of the events and transactions

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For Pear Limited, events and transactions during 2018-2020 included the following. The tax rate for all items is 30%.

1. Depreciation for 2019 was found to be understated by $30,000.

2. A 2020 strike by the employees of a supplier resulted in a loss of $20,000.

3. There was a loss due to obsolete inventory at December 31, 2018 equal to $40,000.

4. A 2020 flood destroyed a building resulting in a loss of $400,000. Floods are very uncommon in that area.

Problem 1: The effect of these events and transactions on 2020 income from continuing operations (net of tax) would be:

Option 1: $63,000.

Option 2: $294,000.

Option 3: $35,000.

Option 4: $14,000.

Reference no: EM132672411

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