Starship Corporation incurred the following losses during 2014:
•Loss of $100,000 was incurred in the abandonment of equipment.
•Accounts receivable of $30,000 were written off as uncollectible.
•Several factories were shut down during a strike at a cost of $240,000.
•Loss of $150,000 was sustained as a result of flood damage,an unusual and infrequent occurrence.
Ignoring income taxes,what amount of loss should Starship report as extraordinary on its annual income statement?

Question

Quizplus · Accepted Answer

The loss due to flood damage is considered an extraordinary item as it was an unusual and infrequent occurrence. Therefore, only the loss of $150,000 should be reported as extraordinary on the income statement. The other losses incurred are considered ordinary and should not be treated as extraordinary items. Thus, options A, B, and C are incorrect.

Starship Corporation Incurred the Following Losses During 2014