Expense Adjustments (One-time expenses)

Definition

A one-time expense or expense adjustment is a non-recurring item on a company's income statement and does not form part of the ongoing business activities. Expense adjustments are made to get a clear view of a company's operating performance. Some one-time expense items, however, may hurt the company's earnings.

Example

Examples of expense adjustments are loss from the sale of an asset, extraordinary legal fees, charges related to change in accounting policy, restructuring costs, etc.

Why it matters

It is essential for companies to identify and highlight one-time expenses as it can skew the company's financial performance, as visible in a financial statement. Expense adjustments are usually made during the periodic FP&A exercise to avoid misrepresenting the company's financial performance.

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