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:
| Income tax expense = $6,700,000 × 30% = $2,010,000 |
| Loss from operations of discontinued component: |
| Gain on sale of assets | $ | 1,000,000 | ($17 million less $16 million) | |
| Loss from operations | (4,600,000 | ) | ||
| Total before-tax loss | $ | (3,600,000 | ) |