Question

On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $19 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 $17 million. The loss from operations of the segment during 2021 was $4.8 million. Pretax income from continuing operations for the year totaled $6.8 million. The income tax rate is 25%. Please help me make 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:

Partial Income Statement
	Amount ($)
Income from continuing operations before income taxes	6,800,000
Income tax expense (25%)	(1,700,000)
Income from continuing operations	5,100,000
Discontinued operations:
Loss from operations of discontinued component(1)	(2,800,000)
Income tax benefit (25%)	700,000
Loss on discontinued operations	(2,100,000)
Net income (5100000- 2100000)	3,000,000

Working:

(1) Loss from operations of discontinued component

Gain on sale of assets ($19 million less $17 million)	2,000,000
Loss from operations	(4,800,000)
Total before ­tax loss	(2,800,000)