Discontinued operations
Response to the following Problem:
Refer to the situation described in Problem 1. 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 $10 million. Prepare the lower portion of the 2016 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures.
Problem 1:
On December 31, 2016, 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 2016 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 2016 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures.