The transaction is considered to be highly unusual
The transaction should occur only rarely
The transaction does not result from operating activities
An extraordinary gain is reported as a separate line item in the income statement, net of taxes, and after the results of operations. By doing so, the effects of the gain on the reported financial results and financial position of a business can be more clearly understood.
Extraordinary gains are much less frequently reported than extraordinary losses, since businesses have an incentive to include the gains in their operating results to make their performance look better. Conversely, there is an incentive to exclude extraordinary losses from operating results, also in order to make company performance look better.
If an extraordinary gain is immaterial to the financial results of a business, it is usually acceptable to aggregate the gain into other line items in the income statement.