Polk Company suffered a loss from earthquake damage at its plant in Nebraska. The loss meets the criteria for an extraordinary item. Where will the company present the extraordinary item on the income statement?
A) As a component of income from continuing operations.
B) As a component of gross profit.
C)After income from continuing operations but before net income.
D)Prior to income from continuing operations before taxes.

Question

Quizplus · Accepted Answer

The company will present the extraordinary item after income from continuing operations but before net income, which is the appropriate place according to GAAP guidelines. This presentation allows investors and stakeholders to clearly distinguish the impact of the extraordinary item on the company's overall financial performance.

Polk Company Suffered a Loss from Earthquake Damage at Its