Popson Inc. incurred a material loss that was not unusual in character but was clearly an infrequent occurrence. This loss should be reported as:

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The loss should be reported as a separate line item within income from continuing operations due to the fact that it was not unusual in character but was an infrequent occurrence. Extraordinary items are reserved for losses that are both unusual and infrequent in nature. A separate line item between income from continuing operations and income from discontinued operations would only be necessary if Popson Inc. had discontinued operations. Reporting the loss in the retained earnings statement would not accurately reflect its impact on income.