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QuestionsCategory: Financials QuadrantExtraordinary items
Tony asked 3 years ago

Hi, 
With reference to Major Cineplex Group Annual Report 2017, I have found the following items under Note 28 “Other operating income” and Note 29 “Expenses by nature”. I have marked items which I think are extraordinary in nature. Could someone check if my understanding of “extraordinary items” is correct please? Thanks!
28 Other operating income:

  • Dividend income 
  • Gains on disposals of investments — EXTRAORDINARY
  • Management fee income 
  • Interest income — EXTRAORDINARY
  • Gain on exchange rate Property tax income — EXTRAORDINARY
  • Compensation income 
  • Others — EXTRAORDINARY

29 Expenses by nature:

  • Depreciation of property and equipment (Note 13)
  • Amortisation of intangible assets
    • Film rights (Note 15)
    • Computer software (Note 15)
  • Amortisation of prepaid rents
  • Impairment of goodwill (Note 14)
  • Impairment of assets (reversal) (Notes 12, 13 and 15)
  • Repairs and maintenance expenditure
  • Staff costs
    Loss from written-off of property, plant, equipment — EXTRAORDINARY
  • Doubtful debts and bad debts — EXTRAORDINARY
  • Loss on diminution in value of inventories (reversal)
  • Loss on goods returns (reversal)
  • Inventory
    • – Cost of inventories recognised as expense (included in “Cost of sales”)
  • Loss from cancellation of lease agreement — EXTRAORDINARY

Tony

1 Answers
Victor Chng answered 3 years ago

Hi Tony,
 
For extraordinary item, I will take the whole other operating income. As for the expense by nature, we don;t adjust that figure because extraordinary item is usually not found there. 

Tony replied 3 years ago

Thank you Victor.

I thought “Loss from written-off of property” would qualify as extraordinary but apparent I was wrong. So much to learn~

Victor Chng replied 3 years ago

Yes it should be extraordinary item but item under the expense of nature, we usually don;t touch the figure.

Tony replied 3 years ago

Hi Victor. Thanks for replying. Could you elaborate on what you meant my don’t touch the figure? I thought any extraordinary items, gain or loss, should be removed from the net profit (or net loss).

Victor Chng replied 3 years ago

Hi Tony, you can still remove the extraordinary item inside the expense by nature if you want to be conservative. Personally, I don;t adjust the expense by nature figure as not all companies put the extraordinary item under expense my nature. Usually the extraordinary item can be found in the income statement already.

Tony replied 3 years ago

Thanks. If my understanding is correct, you would only remove, from the net profit, extraordinary items under “income but not those under “expense”? Am I right?

Victor Chng replied 3 years ago

Yes you are right but if you want to be conservative and remove it also can.

Tony replied 3 years ago

Thanks.

Victor Chng replied 3 years ago

welcome :)