Extraordinary Item

Business, Legal & Accounting Glossary

Definition: Extraordinary Item

Quick Summary of Extraordinary Item

An “extraordinary item” is a non-recurring event that materially affects a company’s finances during a reporting period. Such items must be explained as a disclosure item within the Notes to the Financial Statements.

For an item to be considered “extraordinary”, the event or transaction is to be distinguished both by the unusual nature and infrequency of their occurrence. Extraordinary items as a separate line item in the entity’s income statement, after “discontinued operations’.

Full Definition of Extraordinary Item

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.

Cite Term

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Modern Language Association (MLA):
Extraordinary Item. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 23, 2021 https://payrollheaven.com/define/extraordinary-item/.
Chicago Manual of Style (CMS):
Extraordinary Item. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/extraordinary-item/ (accessed: September 23, 2021).
American Psychological Association (APA):
Extraordinary Item. PayrollHeaven.com. Retrieved September 23, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/extraordinary-item/

Definition Sources

Definitions for Extraordinary Item are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd April, 2020 | 4 Views.