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Discuss condensed income statements

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The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2016 and 2015:

    2016   2015
  Sales $ 15,600,000   $ 10,200,000  
  Cost of goods sold   9,500,000     6,300,000  
 
  Gross profit   6,100,000     3,900,000  
  Operating expenses   3,440,000     2,840,000  
 
  Operating income   2,660,000     1,060,000  
  Gain on sale of division   660,000     -  
 
    3,320,000     1,060,000  
  Income tax expense   996,000     318,000  
 
  Net income $ 2,324,000   $ 742,000  

On October 15, 2016, 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, 2016, 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:

2016 $430,000  loss
2015 $330,000  loss

Reference no: EM131776071

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