Question

On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $17 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 $16 million. The loss from operations of the segment during 2021 was $4.6 million. Pretax income from continuing operations for the year totaled $6.7 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:

$2,325,000

Explanation:

Preparation of the lower portion of the 2021 income statement

CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2021

Income from continuing operations before income $ 6,700,000

Less Taxes Income tax expense ($1,675,000)

($ 6,700,000*25%)

Income from continuing operations $5,025,000

($ 6,700,000-$1,675,000)

Discontinued operations:

Loss from operations of discontinued $3,600,000

Income tax benefit $900,000

(25%*$3.6 million)

Loss on discontinued operations $2,700,000

($3,600,000-$900,000)

Net income $2,325,000

($5,025,000-$2,700,000)

Therefore Income Statement For the Year Ended December 31, 2021 will be $2,325,000