Shannon, R. P. and McCartney, B., Abnormal and Extraordinary Items - Time for Another Change?, School of Accounting & Finance, University of Wollongong, Working Paper 39, 1992.
This paper highlights some major problems which have arisen with the recent introduction in Australia of new definitions of abnormal and extraordinary items in AASB 1018 "Profit and Loss Accounts", which have brought our definitions more in line with international definitions in U.K., U.S.A. and Canada. Evidence exists from an examination of the disclosures of these items by the top 150 listed Australian holding companies. over the period from 1987-1990.that the new definitions are still subjective and inappropriately allow the inclusion of ordinary operations items which are of a non-recurring nature in the operating profit before abnormal items figure and the abnormal items figure. thus posing a problem for any user wishing to estimate operating profit in subsequent period(s). In the light of these findings. the paper suggests an alternative approach to the treatment of currently defined abnormal and extraordinary items.