71. Generally accepted accounting principles require that certain unusual items be reported on the income statement. These items can be classified into two categories. One such category is those items that affect the current period income statement.
72. Unusual items affecting the current period’s income statement consist of fixed assets and discontinued items.
73. When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.
74. An extraordinary item results from events that are significantly different from the typical or normal operating activities of the business.
75. Gains and losses on the disposal of fixed assets are examples of extraordinary items.
76. Changes in accounting principles could be the result of the FASB issuing a new accounting standard.
77. Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.
78. Those unusual items reported as deductions from income from continuing operations should be listed net of the related income tax.
79. Unusual items affecting the prior period’s income statement are common in accounting.
80. When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.