Which of the following should not be reported on the income statement as an extra-ordinary item?
A) The write-off of major assets as a result of new environmental laws prohibiting their use
B) The write-off of a large receivable resulting from a customer's bankruptcy proceedings
C) A large loss as a result of an earthquake
D) Expropriation of assets by a foreign government

Question

Quizplus · Accepted Answer

Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. The write-off of a large receivable due to a customer's bankruptcy does not qualify as an extraordinary item because bad debts are generally considered part of the ordinary activities of a business. Choices A, C, and D involve events that could be considered unusual and infrequent, thus potentially qualifying as extraordinary items under certain accounting frameworks. However, it's important to note that the concept of extraordinary items has been eliminated from U.S. GAAP (Generally Accepted Accounting Principles) by the Financial Accounting Standards Board (FASB) for periods starting after December 15, 2015.

Which of the Following Should Not Be Reported on the Income