Which of the following should be classified as an extraordinary item on the income statement?
A) Gain on a sale of a long term investment.
B) Loss due to discontinued operations.
C) Restructuring charges.
D) Loss resulting from an infrequent natural disaster.

Question

Quizplus · Accepted Answer

An extraordinary item is an event or transaction that is both unusual and infrequent. A loss resulting from an infrequent natural disaster meets both of these criteria and would be classified as an extraordinary item. The other options do not meet the criteria for an extraordinary item. A gain on a sale of a long term investment, while it may be significant, is not unusual or infrequent. A loss due to discontinued operations and restructuring charges are both common business expenses and not considered unusual or infrequent.

Which of the Following Should Be Classified as an Extraordinary