Can someone please help to explain this question? I thought it has to be both unusual and infrequent to record separately? Maybe, it can be either unusual or infrequent?
During the current year, Fuqua Steel Co. had the following unusual financial events occur:
Bonds payable were retired five years before their scheduled maturity, resulting in a $260,000 gain. Fuqua has frequently retired bonds early when interest rates declined significantly.
A steel forming segment suffered $255,000 in losses due to hurricane damage. This was the fourth similar loss sustained in a 5-year period at that location.
A segment of Fuqua's operations, steel transportation, was sold at a net loss of $350,000. This was Fuqua’s first divestiture of one of its operating segments.
Before income taxes, what amount of gain (loss) should be reported separately as a component of income from continuing operations?
A.$260,000
B.$5,000
C.$(255,000)
D.$(350,000)
The sale of a segment would be a discontinued operation since its disposition represents a strategic shift. The remaining two items would be reported as a net $5,000 gain component of income from continuing operations. The concept of “extraordinary” items has been eliminated from GAAP; the presentation for items that are unusual in nature or occur infrequently will be expanded to include items that are both unusual in nature and infrequently occurring.
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