Question

Which of the following would not be classified as an unusual and/or infrequent item?

Multiple Choice

A.) A loss from an enacted law that made inventory unsalable

B.) A loss from settlement of a lawsuit

C.) A loss from a natural disaster that affects the company at infrequent intervals

D.) A loss from restructuring charges

Answer 1

B.) A loss from settlement of a lawsuit

This question has asked to find the transaction or even which is regular.

A.) A loss from an enacted law that made inventory unsalable = Such law would be clearly unexpected as before starting the business, it is clear that such law did not exist, and now if such law comes into existence which turns inventory into waste as cannot be sold is completely irregular and infrequent.

C.) A loss from a natural disaster that affects the company at infrequent intervals = Any loss due to climate change, or any natural disaster or calamity cannot be regular, as even if there is warning and intimation from weather forecast it would not occur with prior notice, and therefore it will be infrequent in nature.

D.) A loss from restructuring charges = Restructuring charges are the ones which occur only when the company is into reorganizing the operations of company, which do not occur regularly and is infrequent in nature, as this restructuring is for long term it do not happen every year or once even in 5 years of operations.

B.) A loss from settlement of a lawsuit = When there is business, there occur law suits frequently sometimes even on small issues, and majorly it is clear that we are going to loose or win the legal suit. Therefore, from all of the above option this is the correct option.