The second category of events requiring disclosure in a separate section of the income statement is extraordinary items. An extraordinary item is a gain or loss that is (1) material in amount (2) unusual in nature, and (3) not expected to recur in the foreseeable future. By definition, extraordinary items are extremely rare; hence, they seldom appear in financial statement. Example of extraordinary items includes the effects of unusual casualties such as earthquakes or tornadoes; expropriation or condemnation of assets by a governmental agency; and gain or losses that may result from a newly enacted law or from the early retirement of long terms debt.
