CA Inter P1 · Chapter 5 · Question 6 of 12
Which of the following would normally be classified as an extraordinary item under AS 5?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Loss of a warehouse and its inventory due to an earthquake
Explanation
Extraordinary items are income or expenses arising from events clearly distinct from the ordinary activities of the enterprise and not expected to recur frequently or regularly. An earthquake loss meets this definition. Inventory write-downs, disposals of PPE and tax settlements arise in the ordinary course of business, though they may need separate disclosure if material.
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