Jax Inc Earned $90,000 and $110,000 of Income from Continuing Operations

question 114

Essay

Jax Inc. earned $90,000 and $110,000 of income from continuing operations after taxes in Years 1 and 2, respectively. The tax rate is 40%. The firm decided to sell one of its business segments on November 1, Year 1. The expected disposal date is February 1, Year 2. The segment's income was a pre-tax loss of $20,000 (not included in income from continuing operations) for Year 1 through November 1, Year 1.
However, the segment earned $30,000 pre-tax income for the remainder of Year 1 and was expected to earn $25,000 pre-tax in Year 2 to the disposal date. The selling price of the segment is $100,000 and the book value of net assets is $130,000. During Year 2, the segment actually earned $40,000 pre-tax.
For both years, prepare the bottom portion of the income statement including a section for discontinued operations for this firm.

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Definitions:

EHR System

Electronic Health Records system, a digital version of a patient's paper chart, making health information more accessible and streamlining the care process.

Interoperability Standards

Agreed-upon protocols and guidelines that enable different information technology systems and software applications to communicate and exchange data efficiently.

National Alliance

A coalition or union formed between parties or groups at a national level, commonly for political, social, or economic purposes.

Health Information Technology

The use of electronic systems and tools to store, share, and analyze health information and improve healthcare delivery.