Discontinued Operations Problem 2. On July 1, 20x1, the David Company announced its plans to sell Division X (a component of the company). By December 20x1, David Company had not sold the division and so it classifies the division as held for sale. During 20x1, David recorded the following revenues and expenses for the division. Sales Cost of goods sold Operating expenses Division X $700,000 600,000 300,000 On December 31, 20x1, Division X had $900,000 in assets and $825,000 of liabilities. On this date, David estimates that the fair value of Division X is $150,000. Assume a 30% income tax rate. What is the income/Loss reported on the 20x1l/S? If the division sold at a gain of $100,000 in 20x2, what would be reported on the I/S as the gain from the sale