Sam Hurd Company has the following items: write-down of inventories, $120,000; loss on disposal of Sports Division, $185,000; and loss due to strike, $113,000.Ignoring income taxes, what total amount should Sam Hurd Company report as extraordinary losses?
A)$ -0-.
B)$185,000.
C)$233,000.
D)$298,000.

Question

Quizplus · Accepted Answer

Extraordinary losses are events that are both unusual and infrequent. A write-down of inventories and a loss due to a strike are not considered extraordinary because they can occur in the normal course of business. The loss on disposal of a division is also not extraordinary as it is part of strategic business decisions. Therefore, no extraordinary losses should be reported.

Sam Hurd Company Has the Following Items: Write-Down of Inventories