Choice "A" is correct. For a loss to be reported as an extraordinary loss under U.S. GAAP, the event causing the loss must be both unusual in nature and infrequent in occurrence. The earthquake in this case does meet these criteria so the loss is reported net of income tax effect as an extraordinary loss of $420,000 (60% of the total $700,000 loss).
Choice "b" is incorrect. Review the criteria for reporting an extraordinary loss.
Choice "d" is incorrect. This is the tax effect of the loss. Review your calculations.
Choice "c" is incorrect. It is not appropriate to report the full loss as an extraordinary loss.