Unusual Item

AAA

DEFINITION of 'Unusual Item'

In financial accounting, unusual items are line items on an income statement which are reported separately from the normal income of the business due to their irregular nature. Unusual items can generally be categorized as one of three types: extraordinary items, discontinued operations and adjustments due to a change in accounting methodology. As a general guideline, unusual items can be thought of as being either strange one-off occurrences or accounting phenomena that are not likely to occur again in the future.

INVESTOPEDIA EXPLAINS 'Unusual Item'

Reporting unusual items separately is important to ensure the transparency of financial reporting. Unusual items are unlikely to recur, so separating these items allows users to better assess the continuing income generating capacity of the business. Investors are focused on the future returns that a company is able to generate, and often prefer to ignore unusual fluctuations which may obscure a company's true prospects.

RELATED TERMS
  1. Discontinued Operations

    A segment of a company's business that has been sold, disposed ...
  2. Nonrecurring Gain Or Loss

    A one-time or highly infrequent profit or loss. One-time gains ...
  3. Financial Statements

    Records that outline the financial activities of a business, ...
  4. Financial Accounting

    The process of recording, summarizing and reporting the myriad ...
  5. Nonrecurring Charge

    An entry that appears on a company's financial statements for ...
  6. Income Statement

    A financial statement that measures a company's financial performance ...
Related Articles
  1. Fundamental Analysis

    Understanding Pro-Forma Earnings

    These figures can either shed light on a company's performance or skew it. Find out why.
  2. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  3. Insurance

    International Reporting Standards Gain Global Recognition

    Comparing financial numbers from corporations in different countries is possible with the adoption of IFRS.
  4. Investing

    What's a Run Rate?

    Run rate is a term used to denote annualized earnings extrapolated from a shorter time frame. Management uses the run rate to estimate future revenues.
  5. Professionals

    Financial Accounting

    Financial accounting is the process of gathering, recording, summarizing and reporting financial data relating to a business. The ultimate goal is to accurately report the financial picture and ...
  6. Investing

    What are Direct Costs?

    Direct costs for finished goods refer to the items and services directly used in production. Other costs such as rent and insurance for the production site are indirect costs. These costs may ...
  7. Investing

    What is Contingent Liability?

    A contingent liability is an amount that might have to be paid in the future, but there are still unresolved matters that make it only a possibility. Lawsuits and the threat of lawsuits are the ...
  8. Investing

    What's Accrued Interest?

    Accrued interest has two meanings. In accounting, it is interest that has been earned, but the time for payment has not yet occurred.
  9. Investing

    What is Absorption Costing?

    Absorption costing is an accounting method primarily used in manufacturing. In absorption costing, the cost of a manufactured product includes the direct costs plus an apportioned share of the ...
  10. Economics

    What Must The UK Do To Keep North Sea Oil Afloat?

    The UK government may need to take drastic action to ensure the viability of UK North Sea offshore oil production amid high costs and shrinking margins.

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center