Exceptional Items vs. Extraordinary Items
Any one please clarify me this….
Will any one clarify the difference between Exceptional Items &
With reference to IFRS what is the disclosure policy for the both.
Thanks & Regards,
to my understanding according to IAS 1 there was for several years the
possibility to show extraordinary items in the P+L (IAS 1.85). Since
2004 this seems to be no longer allowed according to Dr. David
Grünberger who is member in the Accounting Regulatory Committee in
Brussels which decides upon the endorsement of new IAS/IFRS standards
within the EU. According to US-GAAP extraordinary items are to be
shown in the P+L if they are unusual and infrequent items. Exceptional
items seem to be only infrequent, i.e. non-recurring, but not unusual:
Exceptional items relate to material non-recurring items of
income and expense arising from circumstances such as:
- write-downs of inventories to net realizable value or of
property, plant and equipment to recoverable amount, as well
as reversals of such write-downs;
- restructurings of the activities of an entity;
- releases of provisions;
- disposals of property, plant and equipment;
- disposals of associates or other financial assets;
- discontinued operations;
- onerous contracts;
- litigation settlements.
To provide a better understanding of the underlying results of the
period, exceptional items are reported separately if the
aggregate amount of the specific event or project exceeds
Please do not hesitate to ask if you have any questions.
Have a good day and I look forward to hearing from you!
Mit freundlichen Grüssen/ With kind regards
Can someone advise us on tow different models for calculating share based mode and which one is most generally used and why.
Can you please clarify further as to what you are looking for?
You are correct in your understanding that the concept of
extraordinary items has been removed from IAS from 2005. It has been
defined as any item resulting from an activity that is not ordinary
activity of the company concerned.
This does not however mean that exceptional items cannot be disclosed
IAS 1, Para 86, says that an entity can amend the statement of
comprehensive income and include more line items to give a better
understanding of the figures disclosed. However, materiality, nature
and function of the items of income and expense should be used as
guiding factor when deciding upon adding new line items.
The relevant para of IAS 1 are 86 and 87 and copied here;
86. When items of income and expense are material, their nature and
amount shall be disclosed separately.
87. Circumstances that would give rise to the separate disclosure of
items of income and expense include:
(a) write-downs of inventories to net realisable value or of property,
plant and equipment to recoverable amount, as well as reversals of
(b) restructurings of the activities of an entity and reversals of any
provisions for the costs of restructuring;
(c) disposals of items of property, plant and equipment;
(d) disposals of investments;
(e) discontinued operations;
(f) litigation settlements; and
(g) other reversals of provisions.
In simple terms, the term extra ordinary items is no more relevant any
more. If other terms are used which are not already defined in IAS,
such items should also be defined in the financial statements. As an
example, attached are the 2006 accounts of Liberty International Plc
in which exceptional items has been defined as follows;
Exceptional items are those significant items
which are separately disclosed by virtue of their
size or incidence to enable a full understanding
of the group’s financial performance. Transactions
which may give rise to exceptional items are
principally gains or losses on disposal of
investments, subsidiaries and early termination
of debt instruments
I am interested in knowing, which are the two model used in
calculating stock based payment and which is the preferred way in the
service/ITes industry and why.
Hi Vikas, hi Zeeshan,
You can find those informations in IFRS 2 and IAS 32. In general there
is a vesting period when the specific employee has to work for the
specific company. After this vesting period is over, on the vesting
date, those stocks can be granted to this specific employee on the
grant date. Normally the fair value of the stocks on the grant date
has to be spread systematically throughout the vesting period and be
expensed. Which plan for the stock based payment do you have? Did you
already prepare an excel model for the excel spreadsheet you want to
One related question, suppose I have granted a stock with a price of
US$4.80 per share, now suppose valuation as on grant date is US$4.50,
so where should company book this differential- as an Income?
Further if valuation on grant date is US$4.8 ( at par) then what
would be the accouting treatment? Is it possible for you send me the
text for these two standards.
hi,As per IAS 1 (revised) and IAS -8 extra ordinary items are no longer
required to be reported separately . i.e these items no longer exist.AS PER IFRS-2 share based payments which are in nature of “equity
settled transaction” ,which is your case , the transaction is to be
recorded at “fair value on GRANT date ONLY ,and these are not
required to be re measured, ” which is $ 4.5 in your case so the
question of recognizing income does not arise at all .SHARE BASED PAYMENTS ARE exclusively dealt with by IFRS-2 . this has
been clarified by inserting explanations in IAS 19 so now IAS 19 is
not applicable on share based payment also IAS 32/39 and IFRS 3
exclusively provides that IAS 32/39 is not applicable to share based
payment meaning there by these are not to be treated as liability
under IAS 32/29/regards,rohit mansukhani(ACCA)