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The following condensed statements of the Lewis Holding Company are presented for the two years ended December 31, 2014 and 2013:
Net Income 1,488,000 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 companys operations. The sale is expected to be completed in early 2015. The book value of the divisions 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 divisions contribution to Lewis operating income before-tax for each year was as follows: 2014 Operating Loss: ($80,000) 2013 Operating Income: $120,000 (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 companys 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.
