On December 31, 2016, the end of the fiscal year, California Microtech Corporati

Question

On December 31, 2016, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $17 million The business segment qualifies as a component of the entity according to GAAP The book value of the assets of the segment was $16 million. The loss from operations of the segment during 2016 was $4.6 million Pretax income from continuing operations for the year totaled $6.7 million. The income tax rate is 30%. Prepare the lower portion of the 2016 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures.

Explanation / Answer

Partial Income statement is prepared in the following table

* When segment is sold, company has made a gain of $1 million ($17 million - $16 million)

$ millions Income from Contineous Operations before Income taxes          6,700,000 Tax rate @ 30%          2,010,000 Net Income from Contineous Operations          4,690,000 Discontinued Operations Loss From operations of Discontinued Operations (Including gain of $1 million)*        (3,600,000) Tax Benefit          1,080,000 Loss From Discontinued Operations        (2,520,000) Net Income          2,170,000

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