1. Kandon Enterprises has two operating segments: one manufactures equipment and the other breeds and sells horses. Both segments are considered separate components as defined by generally accepted accounting principles. In November 2021 the company decided to sell the horse segment. For 2021, the equipment segment generated pre-tax income of $400,000 but the horse segment generated a pre-tax loss of $140,000. At the end of 2021, the horse segment’s assets had a fair market value of $200,000 and a book value of $240,000. The company’s tax rate is 30%.
   1. Assuming the company sold the discontinued segment’s assets by the end of 2021, prepare a partial income statement for 2021, beginning with income from continuing operations. Ignore earnings per share computations and disclosures.
   2. Assuming the company did not sell the discontinued segment’s assets until 2022, prepare a partial income statement for 2021, beginning with income from continuing operations. Ignore earnings per share computations and disclosures.
   3. Describe how the income statement would be prepared if the fair market value of the horse segment’s assets were $250,000 at the end of 2021 but not sold until 2022.