Extraordinary Items—An Elusive Concept

Abstract

Since the appearances of “extraordinary” gains and losses in the authoritative GAAP literature in 1917, the debate over how to report such items has continued for a century. Until the 1970s, the reporting of extraordinary items was widespread. During recent decades, however, the frequency of reported extraordinary items decreased sharply. Only 1.5 percent of companies reported them in 2014, followed in January 2015 by their elimination from U.S. GAAP. In this paper, we investigate factors affecting the decline in reporting of extraordinary items and reasons for their elimination from U.S. GAAP. Factors include evolving criteria for defining extraordinary items, variation in their financial statement placement, and their changing nature and size over the years. We examine several important FASB pronouncements and events that contributed to the elimination of extraordinary items, including APB Opinion No. 30 in 1973, the FASB's treatment of the losses from the World Trade Center attack in 2001, the FASB and IASB's convergence initiative, the FASB's simplification initiative, and widespread use of pro forma earnings in practice.

Should Extraordinary Items Be Reinstated?

“…If these two major extraordinary events cannot be classified as such for financial reporting purposes, then what qualifies? Hoyle, Paik, and Shi (2017) report that only 1.5 percent of firms reported extraordinary items in 2014. They also offer a complete historical background on the modifications that the reporting requirements of extraordinary items have experienced over the years, and the factors that led to the decline in its use before its ultimate elimination.…”

Genel Sunum Ve Açiklamalar Standardi’na İli̇şki̇n Taslak Meti̇n’de İsti̇snai̇ Geli̇r Ve Gi̇derleri̇n Raporlanmasi

“…IASB ile yakınsama çalışmaları kapsamında 2002 yılında FASB da olağandışı kalemlerin raporlanmasından vazgeçilmesini geçici olarak kabul etmiştir. 2014 yılında FASB, kâr veya zarar tablosunu sadeleştirmek ve finansal raporlamanın maliyetlerini ve karmaşıklığını azaltmak için bir girişimde bulunmuş ve bu kapsamda 2015 yılında olağandışı gelir ve giderlerin sunumunu kaldırmıştır(Hoyle, Paik, & Shi, 2017).Finansal raporlama ve muhasebe standartlardaki değişiklikler, Türkiye'de de hesap planının güncellenmesi ihtiyacını doğurmuş ve bu değişikliklerin etkisiyle Finansal Raporlama Standartlarına Uygun Hesap Planı Taslağı hazırlanmıştır(Akdoğan, 2019). Bu Hesap Planı Taslağı'nda olağandışı gelir ve giderlere ilişkin bölüme yer verilmemiştir.Öztürk vd.…”