Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Basic Question 4 of 10
Which one of the following is a one-time item that analysts should remove from financial statements to understand normal operations?
B. Restructuring charges
C. Income tax expense
A. Interest expense
B. Restructuring charges
C. Income tax expense
User Contributed Comments 5
| User | Comment |
|---|---|
| cfairs | Restructuring charges are part of 'Unusual or infrequent' non-recurring category |
| Vikku | They are NOT part of continuing operations, so reported as a single line item on income statement & appear "above the line (as pre tax)." |
| Shaan23 | In the text it says - Under GAAP - Items that are unusual or infrequent are shown as part of a companies continuing operations. For eg. Restructuring charges such as costs to close plants are considered a part of ordinary activities. Whats going on? |
| gill15 | it just means as an analyst you "should" remove them from income from normal operations, although GAAP allows them. |
| adidasler | think the idea here is that it is not a recurring expense ... so to see how the company normally operates .. you need to take that since it doesnt happen every year |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
describe the concept of sustainable (persistent) earnings;
describe indicators of earnings quality;
explain mean reversion in earnings and how the accruals component of earnings affects the speed of mean reversion;
CFA® 2025 Level II Curriculum, Volume 2, Module 14.