Industry Insights

Extraordinary Items Eliminated

February 2015

Whether or not an event or transaction qualifies as extraordinary has been confusing—and often costly—to report. On January 9, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-01, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20):  Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, to simplify income statement classification and promote consistency between entities. The update is part of FASB’s broader simplification initiative. It eliminates the concept of extraordinary items from U.S. generally accepted accounting principles and requires entities to separately present activities that are both unusual and infrequent within income from continuing operations on a pretax basis. Separate net-of-tax presentation after income from continuing operations no longer will be allowed.

The update applies to all entities including not-for-profit organizations. The amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. An entity may adopt early, provided it applies the guidance from the beginning of the fiscal year of adoption. A reporting entity has the option to prospectively or retrospectively apply the amendments to all prior periods presented in the financial statements.


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