Which of the following is an example of an exceptional item?

• A. Profit or loss on sale of fixed asset
• B. Payroll expenses
• C. Inventory write-down
• D. Routine advertising expense

Answer: (A)

Exceptional items are unusual and infrequent items that arise from activities outside normal trading, and they’re shown separately so ongoing performance isn’t distorted. The gain or loss on the sale of a fixed asset fits this because disposing of a non-current asset is not part of everyday operations; it’s a one-off, non-operating event. In contrast, payroll expenses and routine advertising are regular operating costs, and an inventory write-down is a normal part of inventory valuation and costs of sales. So the sale of a fixed asset stands out as the example of an exceptional item.