Question

On October 15, 2021, 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, 2021, for $5,180,000. Book value of the division’s assets was $4,520,000. The division’s contribution to Jackson’s operating income before-tax for each year was as follows: 2021 $430,000 2020 $330,000
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 of the division’s assets on December 31 was $5,180,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2018, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,960,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

Answer 1

Answer:

Find attached word document with complete question.

The first revised statement showed net income $2324000 in the year and $742000 in the prior year.

The second revised statement showed net income $1,862,000  with a net income $742000 in the year 2020.

The third revised statement showed net income of $1,392,000  in the year 2021 with $742000 in the previous year.

Explanation:

Kindly attached spreadsheet showing the three revised income statements as required by the question.

Download docx

<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> docx

<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> xlsx