On December 31 2018 the end of the fiscal year Revolutionary

On December 31, 2018, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $11.0 million. The business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $8.0 million. The income from operations of the segment during 2018 was $5.0 million. Pretax income from continuing operations for the year totaled $13.0 million. The income tax rate is 40%. Prepare the lower portion of the 2018 income statement beginning with pretax income from continuing operations. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars.) REVOLUTIONARY INDUSTRIES Partial Income Statement For the Year Ended December 31, 2018 Income from continuing operations before income taxes Discontinued operations

Solution

Income tax expense = $13,000,000 * 40% = $5,200,000

GAin from operations of discontinued component:

Gain on sale of assets $3,000,000 ($11 million less $8 million)

Income from operations 5,000,000

Total before­ tax = 8,000,000

REVOLUTIONARY INDUSTRIES
Partial Income Statement
For the year ended December 31, 2018
Income from continuing operations before income taxes	13000000
Income tax expense	5200000
Income from continuing operations	7800000
Discontinued operations:
Gain from operations of discontinued component	8000000
Income tax Expense	3200000
Income on discontinued operations	4800000
Net income	12600000