The semiconductor business of the California Microtech Corporation qualifies as

Question

The semiconductor business of the California Microtech Corporation qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $15 million. The loss from operations of the segment during 2016 was $4.1 million. Pretax income from continuing operations for the year totaled $7.3 million. The income tax rate is 30%. Assume that the semiconductor segment was not sold during 2016 but was held for sale at year-end. The estimated fair value of the segment’s assets, less costs to sell, on December 31 was $16 million.

Prepare the lower portion of the 2016 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars.)

The semiconductor business of the California Microtech Corporation qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $15 million. The loss from operations of the segment during 2016 was $4.1 million. Pretax income from continuing operations for the year totaled $7.3 million. The income tax rate is 30%. Assume that the semiconductor segment was not sold during 2016 but was held for sale at year-end. The estimated fair value of the segment’s assets, less costs to sell, on December 31 was $16 million.

Explanation / Answer

Pretax income from continuing operations 7300000 Income tax expenses (7300000 * 30%) (2190000) Income from continuing operation 5110000 Discontinued operations: Loss from operations of discontinued segment (4100000) Income Tax Benefit (4100000 * 30%) 1230000 Loss on discontinued segment (2870000) Net Income (5110000 - 2870000) 2240000

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