The Accounting For Extraordinary Items

Extraordinary items are some unusual or infrequent transactions or events on contrary to frequent items. According to persistence of earnings, they are the weakest items in persistence. Each country has common agreement in the accounting of frequent items, but has much difference in the definition and accounting of extraordinary items.From the viewpoint of accounting development, income concept is gradually developed from accounting income to economic income. The Accounting Standards Board issued Financial Reporting Standard 3 "Reporting Financial Performance" in 1992, taking the lead in requiring reporting statement of total recognized gains and losses. Subsequently, the Financial Accounting Standards Board and the International Accounting Standards Committee also required reporting comprehensive income, and disclose those unrecognized items in the income statement. Accounting does deal with more accounting standards in our country, but the information disclosure of extraordinary items required by the China Securities Regulatory Commission doesn't have conformability with that required by accounting standards, so all this make it' s recognition, measurement, reporting and disclosure in a condition of separation. Therefore we should keep up with the newest research about extraordinary items, and make systematic research about it according to our accounting environments.On the basis the essence of extraordinary items, this paper first defines extraordinary items and illustrates their character and which accounting elements they belong to. Second, this paper proves the listed companies especially those with losses make use of extraordinary items to manipulate profit by descriptively statistical analysis. In the end, the author gives advice on accounting recognition and how to diagnose extraordinary items and disclosure.The main views about this paper are as following:Firstly, the accounting for extraordinary items is a branch of financial accounting, dealing with recognition , measurement and reporting etc.Secondly, the main contradiction to the research on extraordinary items is that the information disclosure of extraordinary items required by the China Securities Regulatory Commission doesn' t have conformability with that required by accounting standards.Thirdly, the listed companies extraordinary gains and losses has obvious distributing character, for example, extraordinary gains have much more influence on the net profit than extraordinary losses do.Fourthly, the emphasis on the accounting for extraordinary items is that we should perfect the recognition standards about it and establish detailed guidance to judgment especially to those items that are easy to be confused and may be have different means; on the other hand, improve extraordinary items reports according to persistence of earnings, that is to say, the income statement is divided into two parts, one is frequent items, the other is extraordinary items.