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.
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