moneyFYI
Financial Freedom Is Merely Organized Common Sense
The Devil Made Me Do This
Section 3480 of the CICA Handbook deals with extraordinary items and their disclosure in financial statements.
An extraordinary item is unusual, and typically non-recurring. It should be disclosed separately so that investors will have a clear view of the results of ongoing operations of the business. You do not want to confuse people with things that are unlikely to reappear or are beyond the control of management.
By that standard, Maple Leaf Sports and Entertainment should report spring 2013 playoff revenue, net of expenses, as an extraordinary item in their annual report. After all something that happens only once in nine years can hardly be called ordinary and certainly management seems unable to influence the outcome.
If they did not so classify it, their auditors should qualify their report on the basis that extraordinary results must not be presented as part of normal operations.
Review the Nortel lawsuits that resulted from their manipulation of extraordinary items in their 2003 results.
Go Habs!!
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Contact: don@moneyfyi.com | Follow Twitter @DonShaughnessy
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.
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