Question

The semiconductor business of the California Microtech Corporation qualifies as a component of the entity according to GAAP The book value of the assets of the segment was $11 million. The loss from operations of the segment during 2021 was $400 million Pretax income from continuing operations for the year totaled $720 million. The income tax rate is 25%. Assume instead that the estimated fair value of the segment's assets, less costs to sell, on December 31 was $9 million rather than $11 million Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions.) Answer is complete but not entirely correct. CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations before income $ 7.200 000 Loces Income tax expense (1,800,000) $ 5.400,000 Income from continuing operations Discontinued operations Loss from operations of discontinued component Income tax benefit Loss on discontinued operations Net income (loss) (4,000,000) 1.000.000 (3,000,000) $ 2.400.000

Answer 1

California Microtech Corporation Partial income statement for the year ended 31st December 2021 Particulars Amount $ Continuing operations Income from continuing operations before income taxes 72,00,000 Less: Income tax expense @25% 18,00,000 Income Frome continuing operations 54,00,000 Dis-continued operations - Loss from operations of discontinued component (Note) (60,00,000) Add: Income tax benefits @25% 15,00,000 Loss on discounted operations (45,00,000) Net Income 9,00,000 Note: Estimated fair value less cost to sell - book value of assets - loss from segment operations = (9 Million - 11 Million - 4 Million)