F-1 EXTRAORDINARY ITEMS

Question 1

Define extraordinary items.

FAR 1-21

Answer 1

• Material in nature
• Of a character significantly different from the typical or customary business activities (unusual)
• Not expected to recur in the foreseeable future (infrequent)
• Not normally considered in evaluating the ordinary operating results of an enterprise.

Key words: Usual and infrequent

Remember: Extraordinary items are recognized under U.S. GAAP but not IFRS.

Question 2

Q: List some examples of extraordinary items.

FAR 1-22

Answer 2

• The abandonment of, or damage to, a plant due to an infrequent earthquake or an infrequent flood.
• An expropriation of a plant by the government.
• A prohibition of a product line by a newly enacted law or regulation.