The CEO of a company is planning on selling the Merchandising Division at the end of 20x6 so that the company can concentrate on the Construction side of the business. The CEO is interested in determining the impact on the 20x6 statement of income if this were to take place. The following are excerpts from the 20x6 operating budget. Merchandising Division Construction Division Revenue Cost of revenue Administrative expenses Selling expenses Depreciation expense Other expenses Income tax expense (30%) $21,000,000 13,000,000 3,000,000 1,800,000 200,000 1,000,000 600,000 $35,000,000 18,000,000 4,000,000 2,200,000 350,000 1,500,000 2,685,000 $ 6,265,000 Net income $ 1,400,000 The CFO estimates that the carrying value of the Merchandising Division at the end of 20x6 will be $5,500,000 and has provided you with the following other estimates: Merchandising Division $5,000,000 450,000 Fair value of assets Estimated costs to sell Future cash flow budget 20x7 20x8 20x9 20x10 20x11 20x24 $500,000 500,000 500,000 500,000 400,000 The relevant discount rate is 6%. Required - Prepare a proforma statement of income for 20x6 on the assumption that the Merchandising Division was put up for sale on December 31, 20x6