Cool Company has several operating divisions. In September 2020, management decided to discontinue one of its components, Rock. As of 12/31/20 Rock has not been sold. The book value of Rock is $5 million, and Cool believes the fair value less costs to sell will be $3 million. The following information is available relating to all other components of Cool, excluding the operations of Rock, which separately had a pre-tax loss from operations of $2 million in 2020.

Sales 20,000,000

Cost of Goods Sold 8,000,000

Operating Expenses 5,000,000

Interest Expense 1,000,000

The companys income tax rate is 20%.

Using the space provided, present Cool's 2020 multi-step income statement according to GAAP. Ignore EPS disclosures.

Cool Company

Income Statement

For the Year Ended December 31, 2020

Continuing from Part A, Cool actually sold Rock the next year (early 2021) for $4 million ($1 million more than anticipated). In 2021, Rock had a pre-tax loss on operations of $1.5 million up until the date of sale, and all other components had a pre-tax gain on operations of $4 million for the full year. Using the space provided, present Cool's 2021 income statement according to GAAP beginning with income from continuing operations. Cool's tax rate continues to be 20%. Ignore EPS disclosures.

Cool Company

Income Statement

For the Year Ended December 31, 2021