Question

$ 980 Majestic Homes Corporation Income Statement For the Year Ended December 31, 2018 Sales Cost of Goods Sold Gross Profit Selling Expenses General and Administrative Expenses Other Revenues and Expenses (100) 880 (50) (120) (40) Loss on Asset Impairment Income Before Tax 645 (258) Income Tax Expense (at 40%) 387 Net Income Il

Answer 1

Majestic Homes Corporation
Statement of Net Income
For the Year Ended December 31, 2018
Sales	784
Less: Cost of goods sold	80
Gross profit		704
Operating expenses:
Selling expenses	40
General and administrative expenses	96
Total operating expenses		136
Operating income		568
Other revenues and expenses		-25
Loss on asset impairment		-40
Income from continuing operations before tax		503
Income tax expense		201
Income from continuing operations		302
Discontinued operations:
Income from operations of discontinued segment, net of tax		85
Loss on sale of discontinued segment's assets, net of tax		-84
Net income		303

Kindly use appropriate amount descriptions from the drop downs since the same have not been provided with the question.

Working:

Income from operations of discontinued segment, net of tax = (1 - 0.40) x [20% x ($980 - $100 - $170)] = 0.60 x [20% x $710] = 0.60 x $142 = $85.20

Loss on sale of discontinued segment's assets, net of tax = (1 - 0.40) x $140 = 0.60 x $140 = $84