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Recording Extraordinary losses
Assume I suffered a $10 loss when my factory was destroyed in a flood. Assume floods are NOT common. We can assume tax is 3%
When reporting the loss on my income statement am I supposed to report the entire 10 dollars, or 7 dollars? (everything left over after taxes)? |
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The $7. Normally it'll have in parenthesis after it "net of tax benefit," or "net of $3 taxes," or "$10 net of $7 taxes." Point being that it's making a point that taxes have already been netted out of the original amount.
Because this is a below-line item, the taxes are separated out for each item from the taxes that are applicable to normal continuing operations. |
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