What is an extraordinary loss?

The extraordinary loss is a term used to describe the financial loss that occurs for reasons that would be difficult, not if impossible to predict. Losses of this type may be caused by the occurrence of some type of unforeseen natural disasters, actions of extreme vandalism, terrorist activity or even sudden changes in the market that cause the demand for goods and services to fall. Usually there is an extraordinary loss of something that happens once and is unlikely to repeat again in the near future.

One example of extraordinary loss has to do with the need to sell certain assets of the company immediately, while buyers cannot at a price that is or slightly above the current value of this asset. In this case, it is necessary to quickly sell the ability to endure the sale until it is possible to get a fairer price. As a result, the asset is sold with a loss that was not originally expected, so Jess is somewhat unusual or unusual. Sale for below uveThe price of the market value will also require documenting loss in the company's accounting records in a manner that allows you to mark the transaction for possible tax deduction.

businesses can also experience an extraordinary loss due to a natural disaster. Wind damage, floods and even fires can seriously paralyze the company's ability to do business, resulting in loss of sales and loss of equipment, equipment, and even information contained in databases that are damaged and cannot be obtained. Unusual losses of this type may be sufficient to undermine the company for a longer period of time, even allow protection such as backup data sources and insurance coverage that allows you to rebuild. As a result, the company can work with Loss for a few time before it is profitable.

The general rule with the statement of extraordinary loss is that the event is something that is very unlikely,And then it only has the real potential rarely. For example, an enterprise based in a business district, which has been flooded once in the last three decades, could properly refer to flood damage to the facility as an extraordinary loss. On the other hand, a business located in an area that is experiencing wind damage from tornadoes every year would be much less likely to be able to sort the event as unusual or extraordinary.