Question 3: Venn Enterprises, has two operating divisions, one manufactures mach

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Question 3: Venn Enterprises, has two operating divisions, one manufactures machinery and the other bree and sells sheep. Both divisions are considered separate components as defined by generally accepted accounting principles. The sheep division has been unprofitable, and on October 15 Year 1, Venn adopted a formal plan to sell the division. The sale was completed on April 30, Yea 2. At December 31, Year 1, the component was considered held for sale. On December 31, Year 1, the company's fiscal year-end, the book value of the assets of the shee division was $30,000. On that date, the fair value of the assets, less costs to sell, was $24,000. T before-tax loss from operations of the division for the year was $12,000. The company's effectiv tax rate is 30%. The after-tax income from continuing operations for Year 1 was $42,000. Required: 1.Prepare a partial income statement for Year 1 beginning with income from continuing operations. Ignore EPS disclosures. 2.Repeat requirement 1 assuming that the estimated net fair value of the sheep division's asse was $42,000, instead of $24,000.

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Calculation of loss on discontinued operations Operating Loss $   12,000.00 Impairment Loss $     6,000.00 Net Loss before Tax $   18,000.00 Income Tax benfit $     5,400.00 Net after tax loss $   12,600.00 Part 1 Income from continuing operations $   42,000.00 Loss on discontinued operations including impairment $ -18,000.00 Income tax benfit $     5,400.00 Net Income $   29,400.00 Part 2 Income from continuing operations $   42,000.00 Loss on discontinued operations including impairment $ -12,000.00 Income tax benfit $     3,600.00 Net Income $   33,600.00

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