A company suffered a substantial loss when its production facility was destroyed in an earthquakeagainst which it was not insured. Geological scientists were surprised by the earthquake becausethere was no evidence that one had ever occurred in that area in the past. Which of the followingstatements is most accurate? The company should report the loss on its income statement:
Under US GAAP, the earthquake would qualify as an extraordinary item because it is both unusual in nature and infrequent in occurrence. Extraordinary items are reported on the income statement net of tax.