The extraordinary-item category was eliminated in 2015. An event does not leave continuing operations merely because it is unusual, infrequent, material, or outside management's control.
Current Subtopic 220-20 governs this presentation. Under ASC 220-20-45-1, a material item the entity considers unusual, infrequent, or both is a separate component of continuing operations. Its nature and financial effects may appear there or in the notes under ASC 220-20-50-1. The item is not shown net of income tax on the face of the income statement.
Unusual nature is judged against the entity's ordinary activities and operating environment. Infrequency asks whether that type of event is reasonably expected to recur in the foreseeable future. ASC 220-20-55-1 through 55-2 require entity, geography, industry, regulation, and recurrence evidence. A storm can therefore produce different conclusions for two entities in different places.
A discontinued operation is a separate model. It requires a disposed or held-for-sale component and a strategic shift with a major effect. It leaves income from continuing operations and is reported net of tax. When recognition, measurement, and tax amounts stay fixed, this classification changes the continuing-operations subtotal rather than total net income.
Use the routing lesson and event example before completing the classification task.
Put the concept to work
Understand this concept
- State what makes an item unusual in nature and what makes it infrequent in occurrence, and say where such an item is reported now that the extraordinary category is gone.
Apply this concept
- Place an unusual or infrequent item within continuing operations and explain its face, note, and income-tax presentation boundaries.
Analyze this concept
- Distinguish an unusual or infrequent item from a discontinued operation on a set of facts, and explain what the two presentations do differently to income from continuing operations.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Discontinued operation — Analyze
To analyze this concept: Required. The contrast is with the discontinued-operation presentation.
- Income from continuing operations — Analyze
To understand this concept: Required. The item is reported inside continuing operations.
- Income statement classification — Analyze
To apply this concept: Required. The placement is a classification decision on the statement.
Show 2 more prerequisites
- Unusual or infrequent item — Apply
To analyze this concept: Required. Separating the two requires being able to present each.
- Unusual or infrequent item — Understand
To apply this concept: Required. Placing the item requires knowing which category it falls in.
Lessons
Worked examples and cases
Practice
Common mistaken ideas
Sources
Related concepts
Show 1 more related concepts
Use this idea next
- Unusual or infrequent item — Analyze
Required level here: apply. Required. Separating the two requires being able to present each.
- Unusual or infrequent item — Apply
Required level here: understand. Required. Placing the item requires knowing which category it falls in.
Used in these readings
These chapters explain or apply this concept. The label states how the chapter uses it.
- ACC 300: Discontinued operations Use now