Refer to Exhibit 5-1.In the preparation of a revised comparative income statement, Rahm should report income from continuing operations after income taxes for 2010 and 2009, respectively, amounting to

A) $1, 540, 000 and $700, 000
B) $1, 540, 000 and $980, 000
C) $1, 680, 000 and $700, 000
D) $1, 680, 000 and $980, 000

To calculate income from continuing operations after income taxes for both years, we need to adjust the reported net income by removing the effects of the discontinued component (including its tax effect) and the gain on sale of the component (also adjusting for its tax effect). For 2010, the reported net income is $1,680,000. We subtract the gain on sale of $900,000, but since it's before tax, we also need to subtract the tax effect on this gain (30% of $900,000 = $270,000), so we subtract a net of $630,000 ($900,000 - $270,000) from the net income. This gives us $1,050,000 as the income from continuing operations after taxes for 2010. However, we also need to adjust for the loss from the discontinued operation, which is $700,000 before tax. The tax benefit from this loss is 30% of $700,000 = $210,000, so the net effect of the loss is $490,000 ($700,000 - $210,000). Adding this back to the income from continuing operations gives us $1,540,000 for 2010. For 2009, the reported net income is $700,000, which already reflects continuing operations since there's no gain on sale to adjust for. However, the question seems to imply an adjustment was needed for 2009 as well, which might be an error in the question's setup as the calculation provided directly leads to the 2010 adjustment. Given the data and typical accounting adjustments for discontinued operations and their tax effects, the calculation for 2009's continuing operations income after taxes would typically not change from the reported $700,000, unless there was an oversight in the question's details regarding adjustments for 2009. Therefore, based on the provided information and typical accounting practices, the answer focusing on the adjustments for 2010 is option B, acknowledging there might be a misunderstanding or error in the question regarding 2009's adjustments.