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FASB ASC Guide > FASB ASC 225

The Financial Accounting Standards Board (FASB) released the 200 section of the Accounting Standards Codification for the purpose of discussing the braod topic of Presentation. Accounting Standards Codification 225 (ASC 225) was released to address the more specific topic of presentation of the Income Statement (also known as the Profit & Loss statement).

Presentation of the income staement is highly important because it allows users of the financial statements to easily be able to separate how income and expense is flowing through the entity. Gross margin is measured so ensure the profitability of the company from goods alone, and then several items such as management overhead, extraordinary income, etc. come into play as well.

ASC 225-20 – Presentation of Extraordinary Items
Per the Income Statement, items must be recognized separately as an Extraordinary item if it meets the following two criteria.

1. The item is unusual in 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
2. The item is infrequent in 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

Check out more high level explanations of the FASB ASC in our Guide to the Accounting Standards Codification!

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*Technical versions of the standards, authoritative literature can be found in the Financial Accoutning Standards Board website.