What do you mean by Exceptional Items?

Exceptional Items
While the revised Schedule requires separate disclosure of exceptional items on the face of the Statement (with details in notes), the term has not been defined. However, as per the general instructions, the term will have to be assigned the following meaning as per AS 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies :
'12 When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately.'
The revised Schedule requires a separate line for exceptional items to be disclosed before 'Profit before extraordinary items and tax'. However, as per AS 5 :
12 ..the nature and amount of such items should be disclosed separately.
13 Disclosure of such information is sometimes made in the notes to the financial statements.'
Thus, as per AS 5, exceptional items are either disclosed as a separate line item or included in the relevant line item and explained by way of notes to the financial statements. One could argue that since the revised Schedule gives primacy to the requirements of an accounting standard, companies can continue to follow the disclosure requirements of AS 5.
However, there can be an alternative view that considering the specific requirements of the revised Schedule, companies no longer have the option to disclose exceptional items in the notes to the financial statements. It may be noted that the standards will prevail only if there is a conflict between the requirements of a standard and the revised Schedule. However, the given case is not that of a conflict but one of elimination of an option. Accordingly, the aggregate of exceptional items should be disclosed as a separate line item as required by the Statement, with details being given in the notes.

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