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Question 7 Extraordinary items occur when a company sells an entire segment of the business. the...

Question 7

  1. Extraordinary items occur when

    a company sells an entire segment of the business.

    the event is unusual and infrequent.

    a significant FASB rule changes the business valuation.

    a company writes up the value of its intangible assets.

    a company shuts down a location.
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Answer #1

Extraordinary items occur when the event is unusual and infrequent.

The main criterion for item to be extraordinary is its unusual character and infrequent. The unusual activty relates to highly abnormal and unrelated typical operating activities of a company. Such unusual activities are also expected to be one time events. Hence, unusual and infrequent both are features required to extraordinary item.

Such items include, losses during earthquake,tsunamis, fire, etc.

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