#cfa-level-1 #financial-reporting-and-analysis #non-recurring-non-operating-items #understanding-income-statement
2. Extraordinary items
Extraordinary items are BOTH unusual in nature AND infrequent in occurrence, and material in amount. They must be reported separately (below the line) net of income tax.
Common examples are:
- Expropriations by foreign governments.
- Uninsured losses from earthquakes, eruptions, and tornadoes.
Note that gains and losses from the early retirement of debt used to be treated as extraordinary items; SFAS No. 145 now requires them to be treated as part of continuing operations.