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The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31,
2018 and 2017:
2018
2017
Sales
$16, 700, 000 $11, 300, 000
Cost of goods sold
10, 050, 000
6, 850, 000
Gross profit
6, 650, 000
4, 450, 000
Operating expenses
3, 880, 000
3, 280, 000
Operating income
2, 770, 000
1, 170, 000
Gain on sale of division
770, 000
3, 540, 000
1, 170, 000
Income tax expense
1, 416, 000
468, 000
Net income
$ 2, 124, 000 $
702, 000
On October 15, 2018, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a
component of an entity as defined by GAAP. The division was sold on December 31, 2018, for $5,510,000. Book value of the division's
assets was $4,740,000. The division's contribution to Jackson's operating income before-tax for each year was as follows:
2018 $485, 000
2017 $385, 000
Assume an income tax rate of 40%.
Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax
effect on a separate line)
1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing
operations before income taxes. Ignore EPS disclosures
2. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the
division's assets on December 31 was $5,510,000. Prepare revised income statements according to generally accepted accounting
principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the
division's assets on December 31 was $4.070,000. Prepare revised income statements according to generally accepted accounting
principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

attachment_09232019.png

The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31,
2018 and 2017:
2018
2017
Sales
$16, 700, 000 $11, 300, 000
Cost of goods sold
10, 050, 000
6, 850, 000
Gross profit
6, 650, 000
4, 450, 000
Operating expenses
3, 880, 000
3, 280, 000
Operating income
2, 770, 000
1, 170, 000
Gain on sale of division
770, 000
3, 540, 000
1, 170, 000
Income tax expense
1, 416, 000
468, 000
Net income
$ 2, 124, 000 $
702, 000
On October 15, 2018, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a
component of an entity as defined by GAAP. The division was sold on December 31, 2018, for $5,510,000. Book value of the division's
assets was $4,740,000. The division's contribution to Jackson's operating income before-tax for each year was as follows:
2018 $485, 000
2017 $385, 000
Assume an income tax rate of 40%.
Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax
effect on a separate line)
1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing
operations before income taxes. Ignore EPS disclosures
2. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the
division's assets on December 31 was $5,510,000. Prepare revised income statements according to generally accepted accounting
principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the
division's assets on December 31 was $4.070,000. Prepare revised income statements according to generally accepted accounting
principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

attachment_09232019.png

Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the
division's assets on December 31 was $5,510,000. Prepare revised income statements according to generally accepted
accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
(Amounts to be deducted should be indicated with a minus sign.)
Show less A
JACKSON HOLDING COMPANY
Comparative Income Statements (in part)
For the Years Ended December 31
2018
2017
Income from continuing operations before income taxes
Income from continuing operations
0
0
Discontinued operations gain (loss):
Income (loss) on discontinued operations
0
$
o $
< Required 1
Required 3 >
< Prev
2 of 3
Next >

attachment_09232019.png

Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the
division's assets on December 31 was $5,510,000. Prepare revised income statements according to generally accepted
accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
(Amounts to be deducted should be indicated with a minus sign.)
Show less A
JACKSON HOLDING COMPANY
Comparative Income Statements (in part)
For the Years Ended December 31
2018
2017
Income from continuing operations before income taxes
Income from continuing operations
0
0
Discontinued operations gain (loss):
Income (loss) on discontinued operations
0
$
o $
< Required 1
Required 3 >
< Prev
2 of 3
Next >

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