On December 31, 2013, the end of the fiscal year, California Microtech Corporati

Question

On December 31, 2013, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $11 million. The business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $9 million. The loss from operations of the segment during 2013 was $3.7 million. Pretax income from continuing operations for the year totaled $6.4 million. The income tax rate is 30%.

Prepare the lower portion of the 2013 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures

On December 31, 2013, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $11 million. The business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $9 million. The loss from operations of the segment during 2013 was $3.7 million. Pretax income from continuing operations for the year totaled $6.4 million. The income tax rate is 30%.

Explanation / Answer

next item in income statement is :

Tax -30%*6.4 = $1.92 million

after tax income - 6.4*(1-0.3) = $4.48 million

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