Mock FRA restructuring costs part of operating income under GAAP? afternoon, financing, question, included, interest

sharonyys

This is a question about CFA lvl1 mock afternoon session Q48. It's an FRA question about operating profit under GAAP.
My question is that the answer included restructuring cost as an operating expense. Isn't it a debit on non-operating/non-recurring (but continuing) income? So does it mean that all infrequent or unusual items should be in operating income rather than non-operating income, and that non-operating income should only include interest expenses and other expenses related to financing?
Please help me clarify this concept! Thanks!

sharonyys

回复 2# WGLJZJTQGJKMJ


   Thanks for the reply!!So is it true that all expenses from continuing operations (except for interest and other financing expense) are considered operation expenses? Not only the ones to calculate operation income?

WGLJZJTQGJKMJ

Whether under GAAP or IFRS, restructuring cost is regarded as Unusual and Infrequent Items that are reported as operating expenses in the income statement. Similar items are: Gains or losses from the sale of assets or part of a business, Impairments, write-offs and write-downs.

Extraordinary Items (E.I.) are treated differently under GAAP and IFRS. IFRS still reported E.I. as operating expenses in the continuing business income statement. GAAP would report them separately in the income statement, net of tax, after income from continuing operations. See the Chart Below. Typical E.I.s are:
1.        Losses from an expropriation of assets.
2.        Gains or losses from early retirement of debt (when it is judged to be both unusual and infrequent) .
3.        Uninsured losses from natural disasters that are both unusual and infrequent.

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2013-12-5 12:09