Question

please solve the incorrect answer and show me the steps how did you get the right answer?

Return to 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 $10 million. The loss from operations of the segment during 2021 was $3.70 million. Pretax income from continuing operations for the year totaled $5.90 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 $10 million. 1.25 points 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 S 5,900,000 taxes Income tax expense (1,475,000) S 4,425,000 Income from continuing operations Discontinued operations: Loss from operations of discontinued component Income tax benefit Loss on discontinued operations Net income (los) o (7,300.000) X 925,000 (6,375,000) S 1,650,000®

Answer 1

Ans:

CALIFORNIA MICROTECH CORPORATION Partial Income statement for the year ended December 31 2021
Income from continuing operations before income taxes	$5,900,000
less: Income tax expense (5,900,000*25%)	(1,475,000)
Income from continuing operations	4,425,000
Discontinued operations
Loss from operation of discontinued operations	(4,700,000)
Add: Income tax benefit (4700000*.25)	1175,000
Loss on discontinued operations	(3,525,000)
Net income	900,000

Note:Loss from discontinued operations=loss from operations + loss from decrease in value=$3700,000+1000,000=4700,000

Loss from decrease in value need to be considered because actual sale is not happen so if it is happen it need to considered the estimated value