Extraordinary items are events and transactions that meet two conditions: They are (1) unusual in nature, and (2) infrequent in occurrence. To be unusual, the item should be abnormal and only incidentally related to the company’s customary activities. To be infrequent, the item should not be reasonable expected to recur in the foreseeable future.
Companies report extraordinary items net of taxes in a separate section of the income statement, immediately below discontinued operations.