For example, gains or losses from the sale of fixed assets are classified as unusual or infrequent items.
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Non-recurring items should be scrutinized to assess whether they are truly "non-recurring." For example, gains or losses from the sale of fixed assets are classified as unusual or infrequent items. However, for a car rental company that retires part of its fleet of cars annually, such gains or losses are rather recurring in nature. Some non-recurring charges are, in fact, prior pe
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Subject 6. Non-Recurring Items and Non-Operating Items For example, if a non-financial service company invests in equity or debt securities issued by another company, any interest, dividends, or profits from sales of these securities will be shown as non-operating income.
<span>Summary
Non-recurring items should be scrutinized to assess whether they are truly "non-recurring." For example, gains or losses from the sale of fixed assets are classified as unusual or infrequent items. However, for a car rental company that retires part of its fleet of cars annually, such gains or losses are rather recurring in nature. Some non-recurring charges are, in fact, prior period expenses taken too late or future expenses taken too early. For example, asset write-downs may indicate that prior period depreciation or amortization changes were insufficient. Therefore, completely ignoring such non-recurring items in financial analysis may result in an overestimation of a company's earning trend.
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