The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2016 and 2015:

2016 2015 Sales $ 16,100,000 $ 10,700,000 Cost of goods sold 9,750,000 6,550,000 Gross profit 6,350,000 4,150,000

Operating expenses 3,640,000 3,040,000

Operating income 2,710,000 1,110,000 Gain on sale of division 710,000 3,420,000 1,110,000 Income tax expense 1,368,000 444,000 Net income $ 2,052,000 $ 666,000

On October 15, 2016, Jackson entered 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 $5,330,000. Book value of the divisions assets was $4,620,000. The divisions contribution to Jacksons operating income before-tax for each year was as follows:

2016 $455,000 loss

2015 $355,000 loss

Assume an income tax rate of 40%.

Required:

1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

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 December 31 was $5,330,000. How would the presentation of discontinued operations be different from your answer to requirement 1? (Amounts to be deducted should be indicated with a minus sign.)

3. 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 December 31 was $4,010,000. How would the presentation of discontinued operations be different from your answer to requirement 1? (Amounts to be deducted should be indicated with a minus sign.)