CASE

Goods company is a major manufacturer of foodstuffs. The company's products are sold in grocery and convenience stores throughout the United States. Goods' name is well known and respected because its products have been marketed nationally for more than 50 years. In April 2014, Goods was forced to recall one of its major products. A total of thirty-five persons in Chicago were treated for severe intestinal pain, and eventually three people died from complications. All these people had consumed Goods' product.

The product causing the problem was traced to one specific lot. Goods keeps samples from all lots of foodstuffs. After thorough testing, Goods and the legal authorities confirmed that the product had been tampered with after it had left the company's plant and was no longer under the company's control.

The entire product was recalled from the market-the only time a Goods product has been recalled nationally and the only time for reasons of tempering. People who still had the product in their homes, even though it was not from the affected lot, were encouraged to return it for credit or refund. The company designed and implemented a media campaign to explain what had happened and what the company was doing to minimize any chance of recurrence. Goods decided to continue the product with the same trade name and the same wholesale price. However, the packaging was redesigned completely to be tamper-resistant and safety sealed. This required the purchase and installation of new equipment.

The corporate accounting staff recommended that the costs associated with the tampered product be treated as an extraordinary charge on the 2014 financial statements.

Required:

1/ Goods Company plans to recognize the costs associated with the product tempering and recall as an extraordinary charge: Explain why Goods could classify this occurrence as an extraordinary charge.