During calendar 2020, chimpmunks Ltd. entered into an agreement to sell its Trucking Division to Patriots Ltd. to focus their efforts on the expansion of other operating divisions. For purposes of income statement reporting, the Trucking Division qualifies as a separate component of the business. The Trucking Division incurred a net loss of $250,000 from the beginning of the year to the date of sale, December 15, 2020. The combined assets of the Trucking Division had a net book value of $7,340,000 and were sold for $9,000,000 on December 15, 2020. Assume chipmunk has an income tax rate of 40%. During the same period ending December 31, 2020, chipmunk continuing operations delivered a pre-tax income of $7,500,000.

Instructions

Show all your calculations and round all figures to the nearest dollar.

1. Calculate the amounts chipmunk should report for the following items in the Discontinued Operations section of the December 31, 2020 income statement:
   1. Net loss on Operation of Trucking Division.
   2. Net Gain or Loss on Disposal of Trucking Division.
2. Present a partial income statement, with proper notes disclosure, for chipmunk Ltd. for the same period with proper title, beginning with the Net income from continuing operations.