Question

On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $16 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $15 million. The loss from operations of the segment during 2021 was $4.1 million. Pretax income from continuing operations for the year totaled $7.3 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.)

Answer 1

Answer:

Prepare partial income statement as follows:

Income statement
income from continuing operations before tax	7300000
Income tax expense (7300000*0.25)	-1825000
Income from continuing operations	5475000
discontinued operations:
Loss from operations (16 million -15 million)- 4.1 million	-3100000
Income tax benefit (3100000*0.25)	775000
Loss on discontinued operations	-2325000
Net income	2325000

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