2. The following condensed statements of the Lewis Holding Company are presented for the two years ended December 31, 2014 and 2013: 2014 2013 Sales Cost of goods sold Gross profit Operating expenses Operating income Gain on Sale of Assets Impairment loss on assets of division held for sale $15,000,000 9,200,000 5,800,000 3,300,000 2,500,000 100,000 120,000 $12,600,000 8,200,000 4,400,000 2,300,000 2,100,000 Income tax expense (40%) Net income 2,480,000 992,000 $1,488,000 2,100,000 840,000 $1,260,000 Other relevant information: (1) On December 1, 2014, Lewis entered into a tentative agreement to sell the assets of one its divisions. The division comprises a component of the business and its sale is considered a strategic shift in the company's operations. The sale is expected to be completed in early 2015. The book value of the division's assets on December 31, 2014 is $5,200,000 and the estimated fair value (net of expected costs to sell) is $5,080,000. The division's contribution to Lewis' operating income before-tax for each year was as follows: Operating Loss: (S80,000) $120,000 2013 Operating Income: (2) On July 1, 2014, Lewis decided to dispose of a group of assets that was not considered a component of the entity under U.S. GAAP. The sale of the asset group is also not considered a strategic shift in the company's operations. The book value of the asset group was $800,000. The assets were sold on December 1, 2014 for $900,000 (net of selling costs) Required: Prepare revised income statements for 2013 and 2014 according to U.S. GAAP, beginning with income from continuing operations. Assume a tax rate of 40%. You may ignore EPS disclosures. Use the table provided on page 3 for you answer and the extra space for calculations. 2. The following condensed statements of the Lewis Holding Company are presented for the two years ended December 31, 2014 and 2013: 2014 2013 Sales Cost of goods sold Gross profit Operating expenses Operating income Gain on Sale of Assets Impairment loss on assets of division held for sale $15,000,000 9,200,000 5,800,000 3,300,000 2,500,000 100,000 120,000 $12,600,000 8,200,000 4,400,000 2,300,000 2,100,000 Income tax expense (40%) Net income 2,480,000 992,000 $1,488,000 2,100,000 840,000 $1,260,000 Other relevant information: (1) On December 1, 2014, Lewis entered into a tentative agreement to sell the assets of one its divisions. The division comprises a component of the business and its sale is considered a strategic shift in the company's operations. The sale is expected to be completed in early 2015. The book value of the division's assets on December 31, 2014 is $5,200,000 and the estimated fair value (net of expected costs to sell) is $5,080,000. The division's contribution to Lewis' operating income before-tax for each year was as follows: Operating Loss: (S80,000) $120,000 2013 Operating Income: (2) On July 1, 2014, Lewis decided to dispose of a group of assets that was not considered a component of the entity under U.S. GAAP. The sale of the asset group is also not considered a strategic shift in the company's operations. The book value of the asset group was $800,000. The assets were sold on December 1, 2014 for $900,000 (net of selling costs) Required: Prepare revised income statements for 2013 and 2014 according to U.S. GAAP, beginning with income from continuing operations. Assume a tax rate of 40%. You may ignore EPS disclosures. Use the table provided on page 3 for you answer and the extra space for calculations