Extraordinary items are defined as items that are both unusual in nature and occur infrequently. They are shown on the income statement after income from continuing operations and before the tax effect. Large gains or losses from ordinary business activities and write-down of obsolete inventories are not necessarily considered extraordinary items unless they meet the above criteria.

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Extraordinary Items

Question 68

Multiple Choice

Extraordinary items:

A) Include very large gains or losses from ordinary business activities.
B) Are items that are both unusual in nature and occur infrequently.
C) Are shown on the income statement before the tax effect.
D) Include the write-down of obsolete inventories.

Correct Answer: