Assume you have been handed the income statements below for analysis.Study the statements and then answer the questions below.

Income Statement - Entity A

Revenues

$1,000,000

Expenses

(400,000)

Gains (losses) that are not extraordinary

(100,000)

Other gains (losses)

20,000

Income from continuing operations

520,000

Gains (losses) from discontinued operations

75,000

Extraordinary gains (losses)

20,000

Cum. effect of changes in accounting principles

10,000

Net income

$625,000

Income Statement - Entity B

Revenues

$1,000,000

Expenses

(800,000)

Gains (losses) that are not extraordinary

0

Other gains (losses)

20,000

Income from continuing operations

180,000

Gains (losses) from discontinued operations

(275,000)

Extraordinary gains (losses)

20,000

Cum. effect of changes in accounting principles

10,000

Net income

$(65,000)

1)What observations would you make in comparing the operations of these two entities?

2)What questions would you have for the management of Entity B?