Which of the following would be considered an extraordinary item?

I. Write-down of receivables
II. Gains on disposal of a business segment
III. Loss of inventory resulting from a fire
IV. Loss resulting from a strike

A)I and IV
B)I, III, and IV
C)III only
D)I, II, and III

Question

Which of the following would be considered an extraordinary item?

I. Write-down of receivables
II. Gains on disposal of a business segment
III. Loss of inventory resulting from a fire
IV. Loss resulting from a strike

A)I and IV
B)I, III, and IV
C)III only
D)I, II, and III

Quizplus · Accepted Answer

Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Loss of inventory resulting from a fire qualifies as an extraordinary item because it is both unusual and infrequent. Write-downs of receivables, gains on disposal of a business segment, and losses resulting from a strike do not qualify as extraordinary items because they are not considered both unusual and infrequent.

Which of the Following Would Be Considered an Extraordinary Item