Question

On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $14 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 $13 million. The loss from operations of the segment during 2021 was $3.8 million. Pretax income from continuing operations for the year totaled $6.0 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 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 $ 6,000,000 taxes Income tax expense (1,500,000) $ 4,500,000 Income from continuing operations Discontinued operations: Loss from operations of discontinued component Income tax benefit Loss on discontinued operations Net income (loss) (1,000,000) 700,000 (2,100,000) $ 2,400,000

Answer 1

CALIFORNIA MICROTECH CORPORATION Partial lacome Statement for the Year Ended Dec. 31. 2021 Income from continuing operations I before income taxes $ 6,000,000 | Tacome tax expense $(1500.000) Income from continuing operadionu. 45.00.0200. Descontroved operatione t hoss from operation of discontinued.components (2.800.000) * I income tax benefit $ 700,000 Thoss on discontinued operations. [2100.000) ____Net income' Cloy) [2,400,000 Explanatione * Income dax expense = ($6000,000 x 25%) - $1,500.000 * hos from operations of discontinued component : Gain on sale of assets =$ 1,000,000 ($14 million-8 13 million) hoss from operations = 9(3,800,000) Total beforetar loss > $(2,800,000)