The following is a condensed Income Statement for Fossil Inc. for the three years ending December 31, 20x1, 20x2, and 20X3. The statement was prepared by Fossil's CFO, but it incorrectly reports discontinued operations. 20x3 20X2 20x1 10,000,000 $9,600,000 $8,000,000 Net Sales Cost of Sales Gross Profit S6,200,000) ($6,000,000) ($5,000,000) $3,800,000 $3,600,000 $3,000,000 Operating Expenses(S2,200,000) ($2,400,000) ($2,400,000) $1,600,000 $1,200,000 $600,000 $0 Operating Income Gain on Sale of Division $200,000 50 Income Before Taxes Income Tax Expense Net Income $1,800,000 $1,200,000 $600,000 $720000)($480000) ($240,000) $1,080,000 $720,000 $360,000 Additional information: On November 1, 20X2, Fossil entered into a plan to sell one of its separate operating divisions. The book value of the net assets of the division on December 31, 20X2 was $2,100,000. Assume that that management estimates the fair value of the division to be $2,000,000 on December 31, 20x2. The sale was completed on December 31, 20X3 for $2,500,000 (selling costs were immaterial). The book value of the net assets of the division on December 31, 20X3 was $2,300,000. The disposal of the operating division represents a strategic shift that will have major effect. . The division's contribution to Fossil's income before taxes for each year is as follows: 20X1 $50,000 Profit 20X2 ($10,000) Loss 20x3 ($30,000) Loss Fossil has a 40% income tax rate in all years. (Sales Revenue of $500,000; COGS of $400,000; Operating Expenses of $50,000) (Sales Revenue of $400,000;coGs of $350,000; Operating Expenses of $60,000) (Sales Revenue of $200,000; COGS of $190,000 Operating Expenses of $40,000)