Question

The preliminary 20 21 income statement of Alexion Systems, Inc., is presented below: ALEXIAN SYSTEMS, INC. Income Statement For the Year Ended December 31, 2021 ($ in millions, except earnings per share) Revenues and gains: Sales revenue 437 Interest revenue 5Other income 127Total revenues and pains Expenses: 569 Cost of goods sold 246Selling and administrative expense 151Income tax expense 43 Total expenses 440Net Income 129Earnings per share 12.90Additional Information: 1. Selling and administrative expense includes $27 million in restructuring costs. 2. Included in other income is $120 million in income from a discontinued operation. This consists of $90 million in operating income and a $30 million gain on disposal. The remaining $7 million is from the gain on sale of investments 3. Cost of goods sold was increased by $10 million to correct an error in the calculation of 2020's ending inventory. The amount is material Required: Prepare a revised income statement for 2021 reflecting the additional facts.

Answer 1

Alexion Systems, Inc.

Income Statement

For the Year Ended December 31, 2021

(in $ millions)

Sales revenue $437

Cost of goods sold ($256)

Gross profit $181

Operating expenses:

• S&A expense ($124)
• Restructuring costs ($27)

Income from continuing operations b/ Taxes $30

Income tax expense ($7,5)

Income from continuing operations $22.5

Other revenues and expenses:

• Interest revenue $5
• Gain on sale of investments $7
• Income tax for other revenues ($3)

Other revenues and expenses $9

Discontinued operations:

• Operating income $90
• Gain on disposal $30
• Income tax on discontinued operations ($30)

Income from discontinued operations $90

Net income $121.50

Earnings per share $12.15

Step-by-step explanation:

I assumed income tax rate = 25% (I divided $43 / $172)