Question:
Access the FASB’s Codification Research System at the FASB website ( www.fasb.org ). Determine the
specific citation for each of the following items:
1. The criteria for determining if a gain or loss should be reported as an extraordinary item.
2. The calculation of the weighted average number of shares for basic earnings per share purposes.
3. The alternative formats permissible for reporting comprehensive income.
4. The classifications of cash flows required in the statement of cash flows.
Answer:
The FASB Accounting Standards Codification represents the single source of authoritative U.S.
generally accepted accounting principles. The specific citation for each of the following items is:
1. The criteria for determining if a gain or loss should be reported as an extraordinary item:
FASB ASC 225–20–45–2: “Income Statement–Extraordinary and Unusual Items–Other
Presentation Matters–Criteria for Presentation as Extraordinary.”
Extraordinary items are events and transactions that are distinguished by their unusual nature and
by the infrequency of their occurrence. Thus, both of the following criteria shall be met to
classify an event or transaction as an extraordinary item:
a. Unusual nature. The underlying event or transaction should possess a high degree of
abnormality and be of a type clearly unrelated to, or only incidentally related to, the ordinary and
typical activities of the entity, taking into account the environment in which the entity operates.
b. Infrequency of occurrence. The underlying event or transaction should be of a type that would
not reasonably be expected to recur in the foreseeable future, taking into account the environment
in which the entity operates.
Access the FASB’s Codification Research System at the FASB website ( www.fasb.org ). Determine the
specific citation for each of the following items:
1. The criteria for determining if a gain or loss should be reported as an extraordinary item.
2. The calculation of the weighted average number of shares for basic earnings per share purposes.
3. The alternative formats permissible for reporting comprehensive income.
4. The classifications of cash flows required in the statement of cash flows.
Answer:
The FASB Accounting Standards Codification represents the single source of authoritative U.S.
generally accepted accounting principles. The specific citation for each of the following items is:
1. The criteria for determining if a gain or loss should be reported as an extraordinary item:
FASB ASC 225–20–45–2: “Income Statement–Extraordinary and Unusual Items–Other
Presentation Matters–Criteria for Presentation as Extraordinary.”
Extraordinary items are events and transactions that are distinguished by their unusual nature and
by the infrequency of their occurrence. Thus, both of the following criteria shall be met to
classify an event or transaction as an extraordinary item:
a. Unusual nature. The underlying event or transaction should possess a high degree of
abnormality and be of a type clearly unrelated to, or only incidentally related to, the ordinary and
typical activities of the entity, taking into account the environment in which the entity operates.
b. Infrequency of occurrence. The underlying event or transaction should be of a type that would
not reasonably be expected to recur in the foreseeable future, taking into account the environment
in which the entity operates.
