Weyerhaeuser Company is engaged principally in the growing and harvesting of timber and the manufacture, distribution, and sale of forest products. When Mount St. Helens, a volcano located in Washington State, erupted, 68,000 acres of the company’s standing timber, logs, buildings, and equipment were destroyed. As a result, the company recognized a $36 million (net of tax) loss on its income statement.

REQUIRED:
a. Under current accounting rules, where will this loss be reflected in the income statement?
b. At the same time of the eruption, Weyerhaeuser’s income tax rate was approximately 48 percent. Compute the entire loss (ignoring the tax effect) incurred by the company, and provide the journal entries prepared by the company’s accountants to record the loss.