Irregular items, which are by definition unlikely to recur, are reported separately from the income statement proper so that users can better predict future cash flows. Irregular items are reported net of taxes.

Discontinued Operations

Discontinued operations are the most common type of irregular items and must be shown separately. A discontinued operation is a component of an enterprise that either has been disposed of or is classified as "held for sale," and:

• represents a separate major line of business or geographical area of operations; and
• is part of a single, co-ordinated plan to dispose of this separate major line of business or geographical area of operations; or
• is a subsidiary acquired exclusively with a view to resale.

Shifting business location(s), stopping production temporarily, or changes due to technological improvement do not qualify as discontinued operations. Any gain or loss from sale of assets should be recognized in the statement of comprehensive income.

Extraordinary Items

Extraordinary items are unexpected, abnormal, and infrequent—for example, sudden natural disaster, expropriation, or new prohibitions due to changes in regulations.

Changes in Accounting Principles

The effect of changes in accounting principles is the difference between the book value of the affected assets (or liabilities) under the old policy (i.e. principle) vs. what the book value would have been had the new principle been applied. An example, if a company switched from using a weighted-average method to using a LIFO method of valuating inventories, both values for the same time period should be calculated and compared. These changes should be applied retrospectively and shown as adjustments to the beginning balance of affected components in Equity. All comparative financial statements should be restated.