Why insurance claim on the loss of goods by fire is deducted in extraordinary items in case of operating activities?

Dear Student

We know that extraordinary items or activities are those activities which do not occur in the normal course of business.
Since Loss of goods by fire is an activity which does not occur in the normal course of business i.e fire does not occur frequently, hence it is an extraordinary item.
And as a result insurance claim related to loss by fire is also extraordinary item and it is shown as a deduction from the loss in the head of extra ordinary items.


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it is classified as a extraordinary item as it occurs due to non-human economic activities and due to their unusual nature and infrequency of their occurrence.
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