Extraordinary Items

Ultimate definition of being “out of the ordinary” - Material, Unusual, AND Infrequent!

All of these qualities must be considered based on the context of the location and operations of your company though! If you are located in a place that will constantly have earthquakes, then an earthquake will not be considered an extraordinary item.

If something material happens that is either unusual OR infrequent, then it is considered part of your income/loss under continuing operation – non-operating item, before tax.

Reporting an extraordinary item only impacts the placement of the gains and losses, not the overall net income. Keep in mind that numbers are not changed, but the position of the item reported on the income statement does change. When it is not an extraordinary item, it is listed under non-operating, before tax. When it is an extraordinary item, the item is net of tax and shown at the bottom of the income statement.

*IFRS does not allow the reporting of extraordinary items on the income statement or notes to financial statements.

Examples of Extraordinary Items:

• abandonment/damage due to infrequent natural disaster
• "theft" by government
• Illegal products due to new laws