Sale of Operating Division Fabric Corporation sold a major operating division in 2001 for $1,500,000. The book value of the division was $700,000 at the time of sale.

Between the beginning of 2001 and the date of sale, the division reported an operating loss (before taxes) of $300,000.

Fabric reported net income of $600,000 for 2001. The company’s effective income tax rate is 30 percent.

a. Compute the amount of gain or loss reported by Fabric on the sale of the operating division.

b. Compute the amount of earnings from continuing operations reported by Fabric for 2001.

c. Present the portion of the income statement for Fabric that shows earnings from continuing operations and ends with net income.