Suppose you are a financial consultant and the following item has been brought to your attention:

Diaz Company sold a television station for $2,170,000. The book value of the station was $3,840,000. Diaz Company owns no other television stations.

A. Select the appropriate income statement classification of the item.

- Change in accounting estimate, change in account principal, discontinued operation, extraordinary expense.

B. Determine the amount related to the item that would appear in the income statement.

C. Determine whether the item will increase or decrease the net income.

Notes:

1. Assume a tax rate of 40%

2. All items are material.