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When reporting unusual or infrequent items in the income statement which of the following is...

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Accounting

When reporting unusual or infrequent items in the income statement which of the following is not correct?

Multiple Choice

  • If a material event is either unusual in nature or an infrequent occurrence it is classified on the income statement as a special or unusual item in continuing operations.

  • If a material event is either unusual in nature or an infrequent occurrencesuch as a one-time charge resulting from a major restructuringit may be classified on the income statement as a special or unusual item in continuing operations or treated as an extraordinary item if it has been a number of years since the companys last major restructuring.

  • Firms that use early debt retirement will report the associated gains and losses as part of income from continuing operations with separate line-item disclosure.

  • The write-off of obsolete inventory would be reported on the income statement as a special item in continuing operations.

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