Exhibit 5-1
The following condensed income statement of Ranger Corporation is presented for the two years end
December 31, 2016 and 2015:
2016
2012
Net sales
$10,000,000
$9,000,000
Cost of sales
6,000,000
6,000,00
Gross profit
$ 4,000,000
$3,000,000
Operating expense
2,500,000
2,000,000
Operating income
$ 1,500,000
$1,000,000
Gain on sale of a component
900,000.
$ 2,400,000
$1,000,000
Income tax expense
720,000
300,000
Net income
$ 1,680,000
$ 700,000
On January 1, 2016, Ranger entered into an agreement to sell one of its separate operating divisions fo
$2,000,000. The sale resulted in a gain on disposition of $900,000 on November 12, 2016, and qualifi
discontinued component. This division's contribution to Ranger's reported income before income taxe
each year was as follows:
2016
2015
$700,000 loss
$400,000 loss
Assume an income tax rate of 30%.
Refer to Exhibit 5-1. In the preparation of a revised comparative income statement, Ranger should rep
income from continuing operations after income taxes for 2016 and 2015, respectively, amounting to
Select one:
