(Solution) - The two year comparative income statements and a note disclosure for -(2025 Original AI-Free Solution)

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The two-year comparative income statements and a note disclosure for Fleet Shoes, Inc., were as follows:

A fixed asset impairment of $102,000 was recognized in 2007 as the result of abandoning an order management software system. The system project was started in early 2006 and ran into significant delays and performance problems throughout 2007. It was determined that there was no incremental benefit from completing the system. Thus, the accumulated costs associated with the system were written off.
1. Construct a vertical analysis for 2006 and 2007 by determining for each line item its ratio as a percent of sales.
2. Interpret the performance of the company in2007.