UK Accounting Glossary
In financial accounting, an extraordinary item is a non-recurring event that materially affects the financial results of the entity for the reporting period. GAAP requires that any extraordinary item be explained in the notes to the financial statements. An extraordinary item can have either a favourable or unfavourable impact on financial performance. Examples of an extraordinary item for a major company include an acquisition, a restructuring, and the settlement of a lawsuit. An extraordinary item may also reflect the provision of funds for the estimated impact of an anticipated non-recurring event. Comparison of a company’s most recent performance with past results must take into account the effect of each extraordinary item. The business media sometimes report not only a company’s earnings but also the earnings after excluding the impact of a newsworthy extraordinary item.
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This glossary post was last updated: 9th February 2020.