Extraordinary Item

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Extraordinary Item
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The concept of extraordinary item as described below used to be included in Generally Accepted Accounting Principles announced by the Financial Accounting Standards Board until 2015[1].  

Extraordinary item– it is a material gain or loss reported in an income statement that has both of the following critical properties[2]:

  1. It is unusual in nature, meaning it is not normally associated with a particular business operations. It is not expected nor can be foreseen.
  2. It is infrequent in occurrence, meaning it does not happen often but on very rare occasions and is highly unlikely to take place again.

An extraordinary item was to be separately classified, presented, and disclosed in an income statement of a firm. It was placed after discontinued operations to separate it from operating earnings. This resulted from the fact that such item generated one-time gain or loss that was not to recur in the future. Further details of extraordinary items used to be included in the notes to a statement[3].

Seldom have firms reported extraordinary items, still the most common examples included[4]:

  • damages to one's business caused by natural calamities such as volcano eruptions, earthquakes etc.
  • losses resulting from expropriation of assets
  • damages caused by terrorist attack (e.g. bombarding, shooting, etc.)

The following do not bear the hallmarks of an extraordinary item as defined above[5]:

  • normal write-downs of inventory, receivables etc.
  • foreign currency devaluation
  • the effects of a strike
  • weather conditions that are not unusual for a particular region

From 2015 on, any item deemed as abnormal or infrequent, or both is to be separately reported as a component of continuing operation or disclosed in the footnotes[6].


  1. Whittington R. (2016) pp. 187 & 214,
  2. Whittington R., Delaney P. (2008) pp. 145 - 146 & 164,
  3. Weygandt J., Kimmel P., Kieso D. (2010) pp. 14-5, 14-12, 14-24
  4. Gupta A., (2008) pp. 534,
  5. Gupta A., (2008) pp. 534,
  6. Whittington R. (2016) pp. 145 & 146.


Author: Piotr Łabuz