The following are a number of unusual and/or infrequent gains or losses that might be disclosed on the income statement or retained earnings statement. All items are considered to be material in amount.
1. A loss from an earthquake that destroyed a chemical plant of a major chemical company. The region where the plant was destroyed had not had an earthquake in 15 years.
2. A gain resulting from the retirement of bonds payable. The bonds payable had been classified as current liabilities on last year’s ending balance sheet because of their expected retirement during the current year.
3. A reduction in the current depletion expense as a result of the discovery of additional mineral deposits.
4. A gain from the sale of land. The land had been purchased for the construction of a new factory. The company has built several new factories over the past several years, and in each instance has acquired more land than necessary for the factory site. After completion of the factory, the excess land is sold at its appreciated value.
5. A loss incurred by a corporation on the sale of an investment in bonds of a publicly held company. The bonds constitute 5% of the net assets of the publicly held company. The corporation has been holding these bonds as an investment for several years. This is the only investment in securities the corporation has ever made.
6. A loss incurred as a result of an earthquake that destroyed a 2-year-old storage facility of a large retail chain. The storage facility is located in California. A major earthquake occurred in the same region 2 years ago, just prior to the construction of the facility.
7. A decrease in previous years’ earnings as a result of a change from the first-in, first-out inventory method to the average cost inventory method at the beginning of the current year.
8. A loss incurred in the spring by a retail store in a shopping center as a result of a flood of a nearby stream. Although the stream has overflowed several times in the past six years, only 3 stores (out of 38) in the shopping center had previously incurred a significant flood loss.
9. A gain recognized as the result of the sale by a food processing company of a 15% interest in a professional baseball team.
10. A reduction in last year’s income as a result of the discovery in the current year of a miscount (overstatement) of last year’s ending inventory.
11. A loss incurred by a diversified citrus grower because of frost damage in southern California. No frost damage has occurred in the region for seven years, although last year the citrus grower had incurred a loss because of frost damage to its Florida operations.

Required
For each item, indicate in which section of the income statement or retained earnings statement it should be disclosed. Justify your disclosure.