Question

On December 31, 2021, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $13.0 million. The robotics business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $9.0 million. The income from operations of the segment during 2021 was $6.0 million. Pretax income from continuing operations for the year totaled $14.0 million. The income tax rate is 25%.

Required:
Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

Answer 1

Revolutionary Industries

Income Statement

For the year ended December 31, 2021

...

Pre-tax Income from continuing operations $14,000,000

Income taxes ($3,500,000)

Income from continuing operations $10,500,000

Discontinued operations:

• Gain from sale of disc. component $4,000,000
• Income from disc. component $6,000,000
• Income taxes ($2,500,000) $7,500,000

Net income $18,000,000