1. The following is a condensed Income Statement for Truman the Tiger Inc. for the three years ending December 31, 2023, 2024, and 2025. The statement was prepared by Truman the Tiger's CFO, but it incorrectly reports discontinued operations. 2025 2024 Net Sales $9,800,000 $ 8,900,000 Cost of Goods Sold (5,300,000) Gross Profit 4,500,000 Operating Expenses Operating Income (2,100,000) (4,700,000) 4,200,000 (1,700,000) 2023 $ 7,600,000 (4,350,000) 3,250,000 (1,450,000) 2,400,000 2,500,000 1,800,000 Gain on Sale of Division Income Before Taxes Income Tax Expense Net Income 350,000 2,750,000 2,500,000 (550,000) 2,200,000 1,800,000 (500,000) (360,000) 2,000,000 1,440,000 Additional information: On November 1, 2024, Truman the Tiger 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, 2024 was $1,700,000. Assume that that management estimates the fair value of the division to be $2,000,000 on December 31, 2024. The sale was completed on December 31, 2025 for $2,150,000 (selling costs were immaterial). The book value of the net assets of the division on December 31, 2025 was $1,800,000. The disposal of the operating division represents a strategic shift that will have a major effect. The division's contribution to Truman the Tiger's income before taxes for each year is as follows: Year Sales Revenue 2025 1,000,000 2024 985,000 2023 960,000 Costs of Goods Sold 450,000 435,000 420,000 Truman the Tiger has a 20% income tax rate in all years. Operating Expense 200,000 150,000 160,000