Which of the following items should be classified as an extraordinary item on a corporate income statement?
A) gain on the retirement of a bond payable
B) loss from land condemned for public use
C) loss due to an discontinued operation
D) selling treasury stock for more than the company paid for it

Question

Quizplus · Accepted Answer

Loss from land condemned for public use is a non-recurring event that is outside of the company's control and is not related to its normal business activities. Therefore, it should be reported as an extraordinary item on the income statement.

Option A is incorrect because the gain on the retirement of a bond payable is a result of a normal business activity, which is the repayment of debt.

Option C is incorrect because a loss from a discontinued operation is not considered an extraordinary item. It should be reported separately as a discontinued operation but not as an extraordinary item.

Option D is incorrect because selling treasury stock for more than the company paid for it is a result of a normal business activity, which is investing in its own stock.

Which of the Following Items Should Be Classified as an Extraordinary