plz clarify, i think my notes may be wrong.. someone, example, reported

YouCanDoIt

I hope I don't confuse anyone, but can someone just clarify for me. I have it both ways in my notes.....

1.) Extraordinary Items are "unusual AND infrequent" and are reported above or below the line?

2.) Also, is the "line" the Net Income line? For example, would after NI mean below the line?



Edited 1 time(s). Last edit at Friday, June 5, 2009 at 11:47AM by choate05.

kd26gioi

Below the line

The line = After Tax Operating Income

Bulla564

I thought the line was EBIT (pre-tax operating income)

cyber21

It has to be After Tax Operating Income, because extraordinary items are reported Net of Tax. So retriever is right. Also remember that this treatment is only applicable for GAAP.

Ionutzakis

I stand corrected...

I need to keep my head straight between "income from continuing operations" and "operating income". I understand how different they are, but when my eyes see "contonuing operations" my brain reads "operating"

UGHHH

Mechanic

The key between the two types (well, at least with US GAAP):

EXTRAORDINARY = unusual AND infrequent >> BELOW the line, NET of tax

NON-OPERATING = may be unusual OR infrequent >> ABOVE the line, reported GROSS (ie, bc tax is taken out after EBT)

In general, and borrowing from Uncle Becker, an income statement is like "IDEA":

I = Income >> Net Income, reported GROSS (EBT) and *then* NETted of tax (NI), in I/S
D = Discontinued Operations (NET of tax), in I/S
E = Extraordinary Items (NET of tax), in I/S
A = Accounting changes, in Statement of Retained Earnings (if it's an error/omission or change in principle, which require RETROspection and REstatement; changes in estimate are prospective, so that's only going forward and not reflected in past financials)