Please fill out all 3 of these parts The following condensed income statements o
ID: 2397724 • Letter: P
Question
Please fill out all 3 of these parts
The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2018 and 2017: 2018 Sales Cost of goods sold Gross profit Operating expenses Operating income Gain on sale of division $15,100,000 $9,700,000 9,250,000 6,050,000 5, 850,000 3,650,000 3, 240,000 2,640,000 2,610,000 1,010,000 610,000 3, 220,000 ,010,000 1,288,000 404,000 $1,932,000 606,000 Income tax expense Net income 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 $5,030,000. Book value of the division's assets was $4,420,000. The division's contribution to Jackson's operating income before-tax for each year was as follows 2018 $405,000 2017 $305,000 Assume an income tax rate of 40%. Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax effect on a separate line)Explanation / Answer
Requirement 1: Particulars 2017 2018 Income Form Continuing Operations Before Income Tax Operating Income 1010000 2610000 Income Form Discontinue Devision 305000 405000 Income Form Continuing Operations Before Income Tax 1315000 3015000 Dicontinuing Operations Gain Or Loss Sale Consideration 5030000 Less: Value Of Assets 4420000 Less: Income Form Discontinue Devision 305000 405000 Gain Or Loss -305000 205000 Requirement -2 Particulars 2017 2018 Income Form Continuing Operations Before Income Tax Operating Income 1010000 2610000 Income Form Discontinue Devision 305000 405000 Income Form Continuing Operations Before Income Tax 1315000 3015000 Dicontinuing Operations Gain Or Loss Sale Consideration 5030000 Less: Value Of Assets 5030000 Less: Income Form Discontinue Devision 305000 405000 Gain Or Loss -305000 -405000 Requirement-3 Particulars 2017 2018 Income Form Continuing Operations Before Income Tax Operating Income 1010000 2610000 Income Form Discontinue Devision 305000 405000 Income Form Continuing Operations Before Income Tax 1315000 3015000 Dicontinuing Operations Gain Or Loss Sale Consideration 5030000 Less: Value Of Assets 3910000 Less: Income Form Discontinue Devision 305000 405000 Gain Or Loss -305000 715000