Answer:
Net Income amount from Discontinuing Operations is $3,600,000
Explanation:
given data
operating income = $4,000,000
book values = $10,000,000
sold for = $12,000,000
Income from operations = $14,000,000
tax rate = 40%
to find out
amount that Merrell report as income from discontinue operation
solution
we find first here Gain on Sale of Assets of Discontinued Operations that is
Gain on Sale of Assets = $12,000,000 - $10,000,000
Gain on Sale of Assets = $2,000,000
and
Total Income from Discontinuing Operation is
Total Income = $4,000,000 + $2,000,000
Total Income = $6,000,000
and
Net Income from Discontinuing Operations will be
Net Income from Discontinuing Operations = $6,000,000 – ( 40% of $6,000,000 )
Net Income amount from Discontinuing Operations is $3,600,000
