Which of the following should be reported on the income statement as an extraordinary item?
A) The gain on disposal of a component of a business
B) The write-down of receivables deemed uncollectible
C) The loss from volcanic activity
D) The gain from a sale of equipment

Question

Quizplus · Accepted Answer

Extraordinary items are both unusual in nature and infrequent in occurrence. The loss from volcanic activity fits this definition, as it is not a common event for most businesses and is outside the normal course of business activities. Gains or losses from disposals of business components, write-downs of receivables, and gains from sales of equipment are typically considered operational or investing activities and do not meet the criteria for extraordinary classification.

Which of the Following Should Be Reported on the Income