Which of the following is/are TRUE?
I. Losses due to union strike at a plant are classified as extraordinary items.
II. Unusual and infrequent items appear as part of income from continuing operations.
III. Gains from debt retirement are classified as extraordinary items.
IV. The loss from the sale of a portion of business segment is included in income from continuing operations.
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A. B. C. D.D
Extraordinary items are those items are those which are unusual in nature and infrequent in occurrence. Extraordinary items appear segregated from the income from continuing operations on the Income Statement. Therefore, II is false. III is true under current GAAP. Losses due to a strike or the sale of a portion of a business segment are considered unusual but not infrequent and hence, do not qualify as extraordinary items.