Basic Extraordinary
The Per-Share Impact of Extraordinary Items on Basic EPS (Historical Concept)
Basic Extraordinary refers to the component of basic earnings per share (EPS) that was attributable to extraordinary items—events deemed both unusual in nature and infrequent in occurrence. This line isolated the after-tax, per-share effect of such rare events using only the basic weighted average shares outstanding. The extraordinary items classification was eliminated from US GAAP in 2015 (ASU 2015-01), so this category no longer exists in contemporary financial statements and is relevant only for analyzing pre-2015 historical data.
What Were Extraordinary Items?
Under pre-2015 US GAAP (APB Opinion 30), extraordinary items had to meet strict dual criteria: - Unusual nature: Abnormal and unrelated to ordinary activities. - Infrequency of occurrence: Not expected to recur in the foreseeable future.
Qualifying examples were rare: major losses from natural disasters in non-prone areas, government expropriations, or effects of significant new legislation. These were reported net of tax, separately from continuing and discontinued operations, to prevent distortion of core earnings.
Basic Extraordinary showed this impact using basic shares only, providing a direct view for existing common shareholders without dilution assumptions.
Elimination of Extraordinary Items
In 2015, the FASB removed the extraordinary classification via ASU 2015-01 because:
Reasons for Removal
- Very few events truly met both strict criteria.
- Judgment led to inconsistent application across companies.
- Investors preferred footnote disclosures over separate presentation.
- Simplification of financial reporting.
Post-2015, such events are now reported within income from continuing operations (often as unusual or infrequent items) with detailed footnote disclosure if material.
IFRS has never permitted a separate extraordinary items category.
Historical Calculation
The amount was always presented net of tax and calculated independently of other EPS components.
Historical Examples
Example 1: Rare Natural Disaster
Example 2: Asset Expropriation
Today, these would be included in operating/non-operating income with footnote explanations.
Relevance Today vs. Historical Analysis
In modern financial statements (post-2015), this line is always zero. Similar events are now part of continuing operations and often adjusted in non-GAAP normalized earnings.
For pre-2015 historical analysis: - Explains significant one-time EPS impacts - Should be excluded for normalized or core basic EPS - Aids accurate long-term trend evaluation
Warning: Including historical extraordinary items in trend analysis without adjustment can mislead about ongoing performance.
Key Takeaways
Basic Extraordinary showed the per-share effect of rare, unusual, and infrequent events on basic EPS.
Eliminated from US GAAP in 2015 to simplify reporting and reduce subjectivity.
No longer present in current income statements or EPS breakdowns.
Post-elimination, comparable events are reported in continuing operations with disclosures.
Only relevant for interpreting financial data from periods before 2015.
Basic Extraordinary
The Per-Share Impact of Extraordinary Items on Basic EPS (Historical Concept)
Basic Extraordinary refers to the component of basic earnings per share (EPS) that was attributable to extraordinary items—events deemed both unusual in nature and infrequent in occurrence. This line isolated the after-tax, per-share effect of such rare events using only the basic weighted average shares outstanding. The extraordinary items classification was eliminated from US GAAP in 2015 (ASU 2015-01), so this category no longer exists in contemporary financial statements and is relevant only for analyzing pre-2015 historical data.
Table of Contents
What Were Extraordinary Items?
Under pre-2015 US GAAP (APB Opinion 30), extraordinary items had to meet strict dual criteria: - Unusual nature: Abnormal and unrelated to ordinary activities. - Infrequency of occurrence: Not expected to recur in the foreseeable future.
Qualifying examples were rare: major losses from natural disasters in non-prone areas, government expropriations, or effects of significant new legislation. These were reported net of tax, separately from continuing and discontinued operations, to prevent distortion of core earnings.
Basic Extraordinary showed this impact using basic shares only, providing a direct view for existing common shareholders without dilution assumptions.
Elimination of Extraordinary Items
In 2015, the FASB removed the extraordinary classification via ASU 2015-01 because:
Reasons for Removal
- Very few events truly met both strict criteria.
- Judgment led to inconsistent application across companies.
- Investors preferred footnote disclosures over separate presentation.
- Simplification of financial reporting.
Post-2015, such events are now reported within income from continuing operations (often as unusual or infrequent items) with detailed footnote disclosure if material.
IFRS has never permitted a separate extraordinary items category.
Historical Calculation
The amount was always presented net of tax and calculated independently of other EPS components.
Historical Examples
Example 1: Rare Natural Disaster
Example 2: Asset Expropriation
Today, these would be included in operating/non-operating income with footnote explanations.
Relevance Today vs. Historical Analysis
In modern financial statements (post-2015), this line is always zero. Similar events are now part of continuing operations and often adjusted in non-GAAP normalized earnings.
For pre-2015 historical analysis: - Explains significant one-time EPS impacts - Should be excluded for normalized or core basic EPS - Aids accurate long-term trend evaluation
Warning: Including historical extraordinary items in trend analysis without adjustment can mislead about ongoing performance.
Key Takeaways
Basic Extraordinary showed the per-share effect of rare, unusual, and infrequent events on basic EPS.
Eliminated from US GAAP in 2015 to simplify reporting and reduce subjectivity.
No longer present in current income statements or EPS breakdowns.
Post-elimination, comparable events are reported in continuing operations with disclosures.
Only relevant for interpreting financial data from periods before 2015.
Related Terms
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