Definition of Exceptional item:
Accounting entry which reflects materially large cost (such as that incurred in plant modernization) or materially large revenue (such as that realized from an unusually huge order) that may recur and which derives from a firms normal line of business. See also extraordinary item.
Don't confuse exceptional items with extraordinary items. Both are unusual expenses or sources of revenue that are large enough to have an impact on the financial results. However, extraordinary items are not part of a company's ordinary business dealings. Exceptional items are.
An exceptional item is a charge incurred by a company that must be noted separately in its financial report in accordance with Generally Accepted Accounting Principles (GAAP). Despite the name, such items are considered to be ordinary business charges but they must be separated out for the sake of financial reporting clarity.
How to use Exceptional item in a sentence?
- Exceptional items and extraordinary items are often confused, but they are recorded differently.
- An exceptional item is noted separately to avoid confusion with routine business income and expenses.
- A sale of assets or a legal settlement are examples.
Meaning of Exceptional item & Exceptional item Definition