Extra ordinary items are losses or profits that arises from activities that are of unusual and infrequent nature. The losses or profits are included in the income statement of an entity. This portion is a line item in the income statement and is included just beneath the Income from discontinued operations.
In order to better explain the extraordinary items, the accountant can take the support of notes to the accounts.
Initially, it was allowed to present this as part of the income statement under US GAAP. The recent update in US GAAP now eliminates such portion to be a part of income statement like IFRS.
Examples
- Destruction of major production facility of an entity due to earthquake,
- Winning a case filed against the company
- Seizure of the property by the Government or state
Specimen Format
ABC Company
Income Statement
For the Year Ended 31st Dec, 2016
| US$ Millions | ||
| Income from Continuing Operations | 400 | |
| Gain/ (Loss) on extra ordinary item | (100) | |
| Tax credit received | 30 | |
| Net Loss on extra ordinary item | (70) | |
| Net income | 330 |