The following condensed income statement of the Jackson holding company are presented for the two years ended dec 31, 016 and 2015

2016 2015

Sales 15,000,000 9,600,000

Cogs 9,200,000 6,000,000

Gross profit 5,800,000 3,600,000

Operating expenses 3,200,000 2,600,000

Operating income 2,600,000 1,000,000

Gain on sale of division 600,000 -

3,200,000 1,000,000

Income tax expense 1,280,000 400,000

Net income 1,920,000 600,000

On October 15 2016 jackson enterened into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a component of an entity as defined by GAAP. The division was sold on December 31 2016 for 5,000,000 book value of the divisions assets was 4,400,000 the divisions contribution to jacksons operating income before tax for each year is as follows

2016 400,000 loss

2015 300,000 loss

Assume an income tax of 40%

Required

1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before taxes. Ignore EPS disclosure.

2. Assume that by December 31 2016 the division had not yet been sold but was considered held for sale. The fair value of the divisions assets on devember 31 was 5,000,000 how would the presentation of discontinued operations be different from your answer to requirement 1?

3. Assume that by decemember 31 2016 the division had not yet been sold but was considered held for sale the fair value of the divisions assets on dc 31 was 3,900,000 how would the presentation of discontinued operations be different from your answer to requirement 1?