What Is Extraordinary Income?

Extraordinary income refers to items such as gains on the sale of fixed assets — profit that arose temporarily or on a one-off basis during that period.

What the item represents

Extraordinary income is an item recorded below ordinary profit on the income statement, referring to profit that arose from factors specific to that period rather than from the company's ordinary, recurring business activities.

Points to watch when reading it

Extraordinary income can cause net income to fluctuate significantly. When reviewing earnings results, it helps to separately consider the core earning power reflected up through ordinary profit from the impact of extraordinary income and extraordinary losses.

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Frequently Asked Questions

Does recording extraordinary income mean a company's performance is good?
Extraordinary income often stems from a one-off factor that does not necessarily recur period after period. When net income is being boosted by extraordinary income, it's generally advisable to also check the underlying earning power of the core business, such as operating profit and ordinary profit.
What are some examples of extraordinary income?
Common examples include gains on the sale of fixed assets, gains on the sale of investment securities, and gains on the sale of subsidiary shares.