1. The following is a condensed Income Statement for Fossil Inc. for the three years ending December 31, 20x1, 20x2, and 20x3. The statement was prepared by Fossil's CFO, but it incorrectly reports discontinued operations. Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Gain on Sale of Division Income Before Taxes Income Tax Expense Net Income 20x3 20x2 20X1 $10,000,000 $9,500,000 $8,000,000 ($6,200,000) ($6,000,000) ($5,000,000) $3,800,000 $3,500,000 $3,000,000 ($2,200,000) ($2,400,000) ($2,300,000) $1,600,000 $1,100,000 $700,000 $250,000 $0 $1,850,000 $1,100,000 $700,000 ($370,000) ($220,000) ($140,000) $1,480,000 $880,000 $560,000 $0 Additional information: On November 1, 20x2, Fossil entered into a plan to sell one of its separate operating divisions. The book value of the net assets of the division on December 31, 20x2 was $1,500,000. Assume that that management estimates the fair value of the division to be $1,800,000 on December 31, 20x2. The sale was completed on December 31, 20x3 for $1,850,000 (selling costs were immaterial). The book value of the net assets of the division on December 31, 20x3 was $1,600,000. The disposal of the operating division represents a strategic shift that will have a major effect. The division's contribution to Fossil's income before taxes for each year is as follows: Year 20X1 Sales Revenue $400,000 Cost of Goods Sold Operating Expenses $300,000 $50,000 20x2 $450,000 $325,000 $80,000 20X3 $100,000 $80,000 $40,000 . Fossil has a 20% income tax rate in all years. a) Please prepare corrected comparative Income Statements for Fossil for the three years presented above. Begin the income statement with "Income from Continuing Operations (before taxes)" and follow the format outlined in the Course Notes. (3 points) Partial 2010 Comparative Income Statement for Fossil For the years ended December 31 20X1 Income from Continuing Operations (before taxes) 20X3 20X2 Net Income b) Assume that that management estimates the fair value of the division to be $1,400,000 on December 31, 20X2. All other facts remain the same. What is the revised income from discontinued operations (net of tax) for 20X2? (1 point)