# One-Time Item: Overview, Benefits, Examples

![One-Time Item](https://www.investopedia.com/thmb/jQVKx4dwUwCZc8eLYfuG0DZVa0M=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/One-TimeItem_v1-acaaee1395b44c5182c1f5a47f5eed47.jpg)

*— Investopedia / Jake Shi*

## What Is a One-Time Item?

A one-time item is a gain, loss, or expense on the [income statement](https://www.investopedia.com/terms/i/incomestatement.asp) that is nonrecurring in nature and therefore not considered part of a company's ongoing business operations. To get an accurate gauge of a company's operating performance, one-time items are usually excluded by [analysts](https://www.investopedia.com/terms/a/analyst.asp) and investors while evaluating a company. Although many one-time items hurt [earnings](https://www.investopedia.com/terms/o/operatingearnings.asp) or profit, there are one-time items that add to earnings in the reporting period.

### Key Takeaways

*   A one-time item is a gain, loss, or expense on the income statement that is nonrecurring in nature.
*   A one-time item is not considered part of a company's ongoing business operations.
*   One-time items are usually excluded by analysts and investors to properly evaluate a company's core performance.

## Understanding One-Time Items

One-time items are either recorded under operating expenses or below earnings before interest and taxes ([EBIT](https://www.investopedia.com/terms/e/ebit.asp)). EBIT is essentially a company's profit without the cost of interest on debt and taxes factored into it. [Net income](https://www.investopedia.com/terms/n/netincome.asp), on the other hand, is the company's profit after factoring in all costs, expenses, and [revenues](https://www.investopedia.com/terms/r/revenue.asp) and is listed at the bottom of the income statement.

A one-time item, such as the sale of an asset, could inflate net income for that period. One-time items are also called [unusual items](https://www.investopedia.com/terms/u/unusual-item.asp) or nonrecurring items.

## Types of One-Time Items

One-time items listed on a company's financial statements may include:

*   [Restructuring](https://www.investopedia.com/terms/r/restructuring.asp) charges, such as when a company modifies its debt structure
*   [Asset impairment](https://www.investopedia.com/terms/i/impairedasset.asp) or write-off, which is a charge that occurs when the market value of an asset is lower than the asset's value listed on the [balance sheet](https://www.investopedia.com/terms/b/balancesheet.asp)
*   Loss from [discontinued operations](https://www.investopedia.com/terms/d/discontinued-operations.asp), which is from an operation being shut down
*   Loss from early retirement of debt, such as a company paying off its debt–or [bonds](https://www.investopedia.com/terms/b/bond.asp)–early
*   M&A or divestiture-related costs, which can result from [mergers](https://www.investopedia.com/terms/m/merger.asp) and [acquisitions](https://www.investopedia.com/terms/a/acquisition.asp)
*   Gain or loss from an asset sale, such as the sale of equipment
*   Extraordinary legal costs
*   Natural disaster damage costs
*   Charge stemming from a change in accounting policy

## Explaining One-Time Items

A company could list a one-time item separately on its income statement particularly if it's self-explanatory. However, many publicly-traded companies that report their financial performance on a quarterly and annual basis publish [consolidated financial statements](https://www.investopedia.com/terms/c/consolidatedfinancialstatement.asp). These consolidated statements contain the aggregate financial performance for a corporation that owns multiple companies, subsidiaries, divisions, or businesses. The aggregated figures make it easier for the company to report their revenue, expenses, and profit. However, it's up to investors and analysts to investigate what's behind those aggregated figures. As a result, the one-items might not be listed separately on a consolidated income statement.

Instead, the company might group several items into a consolidated line item, such as _other income_, if the one-time items were gains. A separate consolidated line for nonrecurring charges could also be listed. However, there is usually a footnote number next to these line items on the income statement, which refers to a more in-depth explanation of the gains or losses in the footnotes section. The footnotes are found in the management discussion and analysis (MD&A) section of the company's quarterly or annual financial reports.

## Benefits of One-Time Items

Reporting one-time items separately is important to ensure the transparency of financial reporting. One-time items help investors and analysts separate any charges or gains that are not part of the core operating revenue for the company. One-time items are the gains and losses that management does not expect to reoccur. So, segregating these items explicitly on the income statement or in the MD&A section allows for a better assessment of the continuing income-generating capacity of the business.

Listing one-time, nonrecurring items helps investors, analysts, and creditors with the analysis of a company's financial performance. Banks that lend to corporations would want to know how much of the company's revenue is being generated from its core business operations. Credit [covenants](https://www.investopedia.com/terms/c/covenant.asp) issued by banks are frequently used to ensure that companies meet certain thresholds and financial requirements.

One-time items can skew a company's earnings and revenue positively or negatively. Bankers must separate these nonrecurring items to properly calculate whether the company is meeting its covenants. For example, if a company sells cars and has a large one-time gain for selling equipment, analysts and creditors would need to strip out that one-time gain and recalculate the company's net income or EBIT.

Although management will flag certain one-time items, whether an analyst or investor believes they are truly one-time or not, is a different matter. For example, companies in the oil and gas industry frequently sell assets to generate cash when oil prices are low. These one-time gains would increase earnings, but if the company continuously sells assets or investments to raise cash, they're essentially part of how the company does business. Of course, investors must draw their own conclusions as to whether a company that has frequent one-time items, such as gains from the sale of assets, is being managed properly, or perhaps, is in financial trouble.

## Real World Example of a One-Time Item

General Electric Corporation ([GE](https://www.investopedia.com/markets/quote?tvwidgetsymbol=ge)) owns several companies and subsidiaries and is involved in various industries, including aviation, healthcare, and renewable energy.﻿﻿ Below is a portion of the income statement from GE's 10-Q quarterly financial report for Q1 2020.﻿﻿ GE has restructured the company in recent years, and in doing so, has sold off some of its businesses.

### Income Statement

A separate line item showing an income adjustment for the quarter is highlighted in blue on the income statement below.

*   GE listed $6.87 billion in income for the quarter under the section titled _Other Income_ with reference to _Note 23._﻿﻿
*   To get the details of where the money came from, we must search for note #23 in the notes section of the financial statements.

![One-time item example using GE's income statement from Q1 2020.](https://www.investopedia.com/thmb/GskCL_hDQqSLCznEVnEiai2RGH0=/1142x0/filters:no_upscale():max_bytes(150000):strip_icc()/GEIncomestatementQ12020withHighlights-89082fdfdb0f4085ac6cc3123a76e322.jpg)

*One-time item example using GE's income statement from Q1 2020.*

### Notes Section

The entry for "other income" on the income statement is explained in the notes section near the end of the quarterly financial report. Note #23 is listed below.﻿﻿

*   The $6.87 billion gain in _Other Income_ was an aggregated or net amount as shown at the bottom of the table for 2020.
*   It turns out that GE had a one-time gain of $12.37 billion listed as _Purchases and sales of business interests (a)_.
*   The description of the gain is located below the table in the (a) footnote. The footnote describes how the gain was from the sale of the company's BioPharma division.
*   However, the company had a $5.63 billion loss in investment income, which, in part, led to the net amount of $6.87 billion being reported in _Other Income._

![One-time item example using GE's footnotes section from Q1 2020.](https://www.investopedia.com/thmb/eXFk-JtwR8gtDrFTdh7aXBuRDQY=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/GENOte23saleonetimeitem-ef0a5df240b94d3c98042e62dca9b917.jpg)

*One-time item example using GE's footnotes section from Q1 2020.*

Nonrecurring or one-time items may be listed as a separate line item. However, as shown above, with GE, one-time items can be grouped into other line items.

Since one-time items can skew a company's financial performance, it's important that investors dig through the footnotes section of a company's financial statements and investigate what's behind those one-time items.

> **Article Sources**
>
> 1.  GE. "[Investor Relations](https://www.ge.com/investor-relations)." Accessed Sept. 15, 2020.
>     
> 2.  GE. "[Form 10-Q](http://d18rn0p25nwr6d.cloudfront.net/CIK-0000040545/c2eb44e7-c7ed-4b01-a525-0b753c940db8.pdf)." Accessed Sept. 15, 2020.
>     
> 3.  GE. "[Form 10-Q](http://d18rn0p25nwr6d.cloudfront.net/CIK-0000040545/c2eb44e7-c7ed-4b01-a525-0b753c940db8.pdf)," Page 35. Accessed Sept. 15, 2020.
>     
> 4.  GE. "[Form 10-Q](http://d18rn0p25nwr6d.cloudfront.net/CIK-0000040545/c2eb44e7-c7ed-4b01-a525-0b753c940db8.pdf)," Page 74. Accessed Sept. 15, 2020.