Question

On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor busines for $11 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of th assets of the segment was $8 million. The loss from operations of the segment during 2021 was $4.6 million Pretax income from continuing operations for the year totaled $76 million. The income tax rate is 25% 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.) CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2021 Income from continuing operations before income taxes Income from continuing operations Discontinued operations Net income (loss)

Answer 1

Answer:
Partial Income Statement
	Amount ($)
Income from continuing operations before income taxes	$    7,200,000
Income tax expense (25%)	-$    1,800,000
Income from continuing operations	$    5,400,000
Discontinued operations:
Loss from operations of discontinued component(1)	-$    1,600,000
Income tax benefit (25%)	$       400,000
Loss on discontinued operations	-$    1,200,000
Net income (5,400,000 - 1200,000)	$    4,200,000

Working Note
(1) Loss from operations of discontinued component
Gain on sale of assets ($11 million less $8 million)	$    3,000,000
Loss from operations	-$    4,600,000
Total before ­tax loss	-$    1,600,000