IFRS requires the reporting of extraordinary items with other revenue and expenses. US GAAP was recently changed to eliminate the concept of extraordinary items (see pp. 331-333 of your text and Accounting Standards Update 2015-1, https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176164695031&acceptedDisclaimer=true) (Links to an external site.)Links to an external site.. However, GAAP still requires disclosure (either as a line item component of continuing operations or in the notes to the financial statements) of material events or transactions that are either unusual in nature or infrequent in occurrence.
Do you agree with the elimination of the concept of extraordinary items? Have users of financial statements prepared in accordance with GAAP lost any material information due to the change?
2. Along with GAAP-compliant financial reporting, some companies also provide certain financial reports or financial measures that are not in accordance with GAAP (i.e., non-GAAP measures). These businesses assert that they are providing useful and relevant information.
•Research and discuss current restrictions on the publishing of non-GAAP financial measures (hint: google ‘non-GAAP SEC’).
•Should the reporting of non-GAAP financial measures be banned as being, at the very least, misleading?