Question

in cetnar corporation of principals of financial accounting 12 addition ,in the corporation income statement how do i calculator the extraordinary item

Answer 1

Extraordinary item may be defined as events in the financial statement of an organisation that are unusual or infrequent and are reported as gain or loss in the income statement.
These items are disclosed presented and classified separately on company's financial statement.
Extraordinary items are shown separately because it is one time gain or loss and is not expected to reoccur in future.
The extraordinary items are shown in the income statement after income from continuing operations.

In 2015, the financial accounting standard board has removed the extraordinary item concept from U.S GAAP, for the purpose of reduction in cost and complexity of preparing financial statements.This update has required the companies to no longer describe the event is extraordinary item but they have to report and disclose as infrequent items and unusual items and its effect on income before income taxes in financial statement.

The new update has only subtracted the work of organisation and auditor to classify the rare or unusual item as extraordinary item in financial statement.

After, this change in financial account by financial accounting standard board the organisation are allowed to give more specific names to rare events such as "effect from fire at warehouse".