We over paid our workers comp expense by 40,000 and we may only recoop 20,000.
Can we report 20,000.00 as an extraordinary item
Carolyn Thompson
Replies (3)
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Exceptional items are defined very broadly, and an item cannot be extraordinary if it is exceptional. See FRS3.
It seems Extraordinary items only exist because the Companies Act says they do.
When I were a lad...
...we learnt that exceptional items were those that derived for normal trading activities but that by virtue of size or timing distorted the trading account. Thus a true and fair view was only possible by taking these into account.
An extraordinary item was one that arose from outside normal trading activities, but that should still produce an entry in the profit and loss account.
In either case, the amounts have to be material.
Of course this was long before FRS or SORPs were thought of. In fact, SSAPS had only just got into double figures. Ah, those were the days. 16 column cash, purple audit pencils...
I would have thought that this item was exceptional. Is £20k material in the accounts, though?