Extraordinary Items
Unusual and infrequent gains or losses that were formerly reported separately on the income statement under GAAP.
What is Extraordinary Items?
Extraordinary items were gains or losses that GAAP once required companies to report separately on the income statement, below income from continuing operations, because they were both unusual in nature and infrequent in occurrence. Classic examples included losses from natural disasters in areas not prone to them or gains from early debt extinguishment. The separate presentation was intended to help investors identify one-time events that should not be extrapolated into future earnings forecasts. The Financial Accounting Standards Board (FASB) eliminated the extraordinary items concept in January 2015 through ASC Update 2015-01, effective for fiscal years beginning after December 15, 2015. Under current GAAP, all unusual or infrequent items are simply disclosed within continuing operations, though their nature is still described in the notes if material.
Example
Prior to 2015, if a company located in the Midwest had a factory destroyed by a hurricane—an event considered extraordinary for that region—it would report the loss separately on the income statement after net income from operations. Since FASB's 2015 update, the same loss would appear within operating results with disclosure in footnotes.
Source: FASB ASU 2015-01 — Income Statement: Extraordinary and Unusual Items