The following considered Income statement of hunt steel corp are presented for the two years ended december 31 2016 and 2015:

sales 20,000,000 19,600,000

cogs 13,400,000 13,200,000

gross profit 6,600,000 6,400,000

operating expenses 2,700,000 2,600,000

operating income 3,900,000 3,800,000

gain on sale of division 800,000 0

4,700,000 3,800,000

income tax expense 1,880,000 1,520,000

net income 2,820,000 2,280,000

On September 6, 2016, Huntington entered into an agreement to sell the assets of one of its divisions. The division comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The division was sold on December 31, 2016, for $7,000,000. Book value of the divisions assets was $6,200,000. The divisions contribution to Huntingtons operating income before-tax for each year was as follows:

2016	455,000 loss
2015	325,000 income

Assume an income tax rate of 40%.

Instructions:

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

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 $7,000,000. How would the presentation of discontinued operations be different from your answer to requirement 1?

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 $5,000,000. How would the presentation of discontinued operations be different from your answer to requirement 1?

NOTE: an income statement does not have to be prepared for Instructions 2 and 3. An explanation will suffice