Question

    When a company sells a fixed asset, the resulting gain

    from the sale must be categorized appropriately in the financial statements. Understanding the nature of this gain is crucial for accurate financial reporting and analysis. Considering the classification criteria within the context of accounting standards, which of the following best describes the gain on sale of a fixed asset? 
    A Exceptional Item Correct Answer Incorrect Answer
    B Extra-ordinary Item Correct Answer Incorrect Answer
    C Operating Item Correct Answer Incorrect Answer
    D General Item Correct Answer Incorrect Answer
    E Other Item Correct Answer Incorrect Answer

    Solution

    The gain on the sale of a fixed asset is considered an exceptional item because it is significant and unusual but related to the company's core operations. This classification helps distinguish it from regular operating income and expenses, providing clearer insight into the company's financial performance.

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