The following incorrect income statements of the Jackson Holding Company are presented for the two years ended December 31 2018 and 2017 2018 2017 aleS Cost of goods sold Gross profit Operating expenses Operating income Gain on sale of division $16,500,000 $11,100,000 9,950,000 6,750,000 4,350,000 3,800,000 3,200,000 2,750,000 1,150,000 6,550,000 750,000 Income tax expense Net income 3,500,0001,150,000 230,000 $ 2,800,000 $ 920,000 700,000 On October 15, 2018, 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, 2018, for $5,450,000. Book value of the division's assets was $4,700,000 Jackson's operating income included the following income (loss) from operations for this discontinued division in 2018 and 2017, respectively: 2018:$475,000 income 2017 $375,000 income Assume an income tax rate of 20%. Required: (In each case, show the tax effect on a separate line) 1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures 2. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value (minus costs to sell) of the division's assets on December 31 was $5,450,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Hint Is the fair value minus costs to sell higher or lower than the book value?) 3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value (minus costs to sell) of the division's assets on December 31 was $4,050,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Hint Is the fair value minus costs to sell hiaher or lower than the book value