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Basic Question 1 of 12

Which one of the following is a one-time item that analysts should remove from financial statements to understand normal operations?

A. Interest expense
B. Restructuring charges
C. Income tax expense

User Contributed Comments 5

User Comment
cfairs Restructuring charges are part of 'Unusual or infrequent' non-recurring category
Vikku They are NOT part of continuing operations, so reported as a single line item on income statement & appear "above the line (as pre tax)."
Shaan23 In the text it says - Under GAAP - Items that are unusual or infrequent are shown as part of a companies continuing operations. For eg. Restructuring charges such as costs to close plants are considered a part of ordinary activities.

Whats going on?
gill15 it just means as an analyst you "should" remove them from income from normal operations, although GAAP allows them.
adidasler think the idea here is that it is not a recurring expense ... so to see how the company normally operates .. you need to take that since it doesnt happen every year
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Edward Liu

Edward Liu

Learning Outcome Statements

describe the financial reporting treatment and analysis of non-recurring items (including discontinued operations, unusual or infrequent items) and changes in accounting standards;

contrast operating and non-operating components of the income statement;

CFA® 2024 Level I Curriculum, Volume 3, Module 18.