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Simple English definitions for legal terms
exceptional charge
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A quick definition of exceptional charge:
An exceptional charge is a special type of cost that a business incurs, which is not a regular expense. It is also known as a special charge or one-time charge. This cost is excluded from income calculations and is not considered an extraordinary item under generally accepted accounting principles. It is like a surprise expense that a business has to pay, which is not a part of its regular operations. For example, if a company has to pay a large amount of money for a lawsuit settlement, it would be considered an exceptional charge.
A more thorough explanation:
An exceptional charge is a type of expense that is not considered a normal cost of doing business. It is also known as a special charge or one-time charge. This type of expense is excluded from income calculations because it does not meet the Generally Accepted Accounting Principles (GAAP) test for extraordinary items.
For example, if a company has to pay a large settlement in a lawsuit, this would be considered an exceptional charge. It is not a normal cost of doing business and is not expected to occur regularly. Another example would be if a company had to write off a large amount of inventory due to damage or obsolescence.
These examples illustrate how exceptional charges are expenses that are not part of a company's regular operations. They are one-time events that can significantly impact a company's financial statements.