Crash Course in Accounting and Financial Statement Analysis, Second Edition

Extraordinary Items

Extraordinary items are results that are unusual and infrequent and material in amount. Such transactions may include:

• Gains (losses) on the extinguishment (early repayment) of debt

• Uninsured losses from natural disasters

• Losses from expropriation of assets by foreign governments

• Gains/losses from passage of new law

These are reported on the income statement net of taxes (after net income) from continuing operations (Exhibit 5.9).

Exhibit 5.9. Extraordinary Items Represent Unusual and Infrequent Transactions

Millions of dollars, except per-share amounts		2004	2003	2002	2001	2000
COMBINED STATEMENT OF INCOME DATA REVENUES AND OTHER INCOME
Total sales and other operating revenues		$ 150,865	$ 119,575	$ 98,340	$ 103,951	$ 116,619
Income from equity affiliates and other Income		4,435	1,702	197	1,751	1,917
TOTAL REVENUES AND OTHER INCOME		155,300	121,277	98,537	105,702	118,536
TOTAL COSTS AND OTHER DEDUCTIONS		134,749	108,601	94,437	97,517	104,661
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		20,551	12,676	4,100	8,185	13,875
INCOME TAX EXPENSE		7,517	5,294	2,998	4,310	6,237
NET INCOME FROM CONTINUING OPERATIONS		13,034	7,382	1,102	3,875	7,638
NET INCOME FROM DISCONTINUED OPERATIONS		294	44	30	56	89
NET INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES		13,328	7,426	1,132	3,931	7,727
	Extraordinary loss, net of tax	–	–	–	(643)	–
	Cumulative effect of changes in accounting principles	–	(196)	–	–	–
NET INCOME		$ 13,328	$ 7,230	$ 1,132	$ 3,288	$ 7,727

IFRS Perspective: Extraordinary Items IFRS prohibits ...