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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.

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Answer:

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

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