Brief Exercise 4-5
MEMORAX COMPANY Partial Income Statement For the Year Ended December 31, 2011 Income before income taxes and extraordinary item .......... $ 790,000 Income tax expense* .......................................................... 316,000 Income before extraordinary item ...................................... 474,000 Extraordinary item: Loss from earthquake, net of $208,000 tax benefit ......... (312,000) Net income ........................................................................... $ 162,000
*$790,000 x 40%
Brief Exercise 4-6
WHITE AND SONS, INC. Partial Income Statement For the Year Ended December 31, 2011 Income before income taxes and extraordinary item .......... Income tax expense* .......................................................... Income before extraordinary item ...................................... Extraordinary item: Loss from earthquake, net of $160,000 tax benefit ......... Net income ........................................................................... Earnings per share: Income before extraordinary item ....................................... Loss from earthquake ......................................................... Net income ..........................................................................
$ 850,000 340,000 510,000 (240,000) $ 270,000 $ 5.10 (2.40) $ 2.70 *$850,000 x 40%
Note: Restructuring costs, interest revenue, and loss on sale of investments are included in income before income taxes and extraordinary item.
Brief Exercise 4-7
CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2011
Income from continuing operations before income taxes ... $ 5,800,000 Income tax expense* ........................................................... 1,740,000 Income from continuing operations ................................... $ 4,060,000 Discontinued operations: Loss from operations of discontinued component (including gain on disposal of $2,000,000)** .......................... (1,600,000) Income tax benefit ............................................................ 480,000 Loss on discontinued operations ...................................... (1,120,000) Net income ........................................................................... $ 2,940,000
* $5,800,000 x 30%
** Loss from operations of discontinued component: Gain on sale of assets Operating loss
Total before-tax loss
$ 2,000,000 ($10 million less $8 million) (3,600,000) $(1,600,000)
Brief Exercise 4-8
CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2011 Income from continuing operations before income taxes ... Income tax expense* ........................................................... Income from continuing operations ................................... Discontinued operations: Loss from operations of discontinued component** ...... Income tax benefit ............................................................ Loss on discontinued operations ...................................... Net income ...........................................................................
$ 5,800,000 1,740,000 $ 4,060,000 (3,600,000) 1,080,000 (2,520,000) $ 1,540,000 * $5,800,000 x 30% ** Includes only the operating loss. There is no impairment loss.