Which of the following material gains/losses would be disclosed as an extraordinary item on an entity's income statement?
A) a loss arising from the write-off of a large uncollectible accounts receivable balance
B) a loss arising from the expropriation of a manufacturing plant by a foreign government
C) a gain from the sale of a component of the entity's business
D) a gain from the sale of manufacturing equipment no longer needed by the entity

Question

Quizplus · Accepted Answer

An extraordinary item is an event or transaction that is considered to be both unusual and infrequent in nature. The expropriation of a manufacturing plant by a foreign government would be considered an unusual and infrequent event, and therefore would be disclosed as an extraordinary item on the income statement. The other options do not meet the criteria for an extraordinary item.

Which of the Following Material Gains/losses Would Be Disclosed as an Extraordinary