McMinville Corporation manufactures paper products. In 2007, the company purchased several large tracts of timber for $22 million with the intention of harvesting the timber rather than buying this critical raw material from outside suppliers. However, in 2011, McMinville abandoned the idea and all of the timber tracts were sold for $31 million. Net income for 2011, before considering this event, is $17.5 million and the company's effective tax rate is 30%.
The focus of this case is the income statement presentation of the gain on the sale of the timber tracts. Deliberate the situation independently and share the solution with the class.
After creating an income statement, you need to also explain how you got the numbers too and the label for each answer.