WHAT IS AN EXTRAORDINARY ITEM? 

- By MaddaliSwetha

An extraordinary item can be a gain or a loss, but it must have all of the following characteristics:

1. Unusual in nature, and

2. Infrequent in occurrence, and

3. significant in amount.

As a result of this requirement, extraordinary items are very rare. A recent issue of Accounting Trends & Techniques published by the AICPA showed that of the 500 financial reports surveyed in 2009 there were only 3 extraordinary items reported. 

In 2008 there were 2 extraordinary items reported in the 500 financial reports surveyed. In 2007 and 2006 there were 4 extraordinary items presented in each of the year’s 600 financial reports. 

In other words, over the four-year period only 0.6% of the 2,200 financial reports surveyed had presented extraordinary items.