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Khalil_Nancy_Sources - NancyKhalil 1 Unusual or...

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NancyKhalil 1. Unusual or Extraordinary Items Occasionally, a company will encounter an item that is so extraordinary that it merits special display on the income statement. Under IAS 8, extraordinary items are: Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and therefore are not expected to recur frequently or regularly. Companies must consider their particular facts and circumstances to determine whether an item is extraordinary, as an item could be extraordinary for some companies but not others. IAS 8 notes that events such as the expropriation of assets or natural disasters such as earthquakes would normally qualify as extraordinary items for most companies. However, an earthquake might be extraordinary for a company whose factory is destroyed but not for the property and casualty insurance company that insured the loss. Under U.S. GAAP, Accounting Principles Board (APB) 30 provides that: Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Thus, both of the following criteria should be met to classify an event or transaction as an extraordinary item: a. Unusual nature—the underlying event or transaction should possess a high degree of
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