Question:
On December 31, 2013, the end of the fiscal year, California Microtech Corporation completed the sale of
its semiconductor business for $10 million. The business segment qualifies as a component of the entity
according to GAAP. The book value of the assets of the segment was $8 million. The loss from
operations of the segment during 2013 was $3.6 million. Pretax income from continuing operations for
the year totaled $5.8 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.
Answer:
CALIFORNIA MICROTECH CORPORATION
Partial Income Statement
For the Year Ended December 31, 2013
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
On December 31, 2013, the end of the fiscal year, California Microtech Corporation completed the sale of
its semiconductor business for $10 million. The business segment qualifies as a component of the entity
according to GAAP. The book value of the assets of the segment was $8 million. The loss from
operations of the segment during 2013 was $3.6 million. Pretax income from continuing operations for
the year totaled $5.8 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.
Answer:
CALIFORNIA MICROTECH CORPORATION
Partial Income Statement
For the Year Ended December 31, 2013
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
