Answer: continuing operations and presented separately.

## Explanation Under US GAAP, material income items that are both **unusual** and **infrequent** are reported as part of **continuing operations** but must be **presented separately** on the income statement. This treatment is specified in ASC 225-20 (Income Statement - Unusual or Infrequent Items). ### Key Points: 1. **Unusual Nature**: The item has a high degree of abnormality and is clearly unrelated to the ordinary activities of the entity. 2. **Infrequent Occurrence**: The item is not reasonably expected to recur in the foreseeable future. 3. **Presentation**: These items are shown as a separate line item within income from continuing operations, either before or after income from operations. 4. **Disclosure**: The nature and financial effects of these items must be disclosed in the notes to the financial statements. ### Why Other Options Are Incorrect: - **Option B**: Incorrect because unusual and infrequent items MUST be presented separately, not combined with other continuing operations. - **Option C**: Incorrect because these items are NOT classified as non-operating activities under US GAAP; they remain part of continuing operations. ### Accounting Standard Reference: - ASC 225-20-45-16: "Items that are unusual or infrequent, but not both, shall be reported as a separate component of income from continuing operations." - ASC 225-20-45-17: "Items that are both unusual and infrequent shall be reported as a separate component of income from continuing operations." This presentation allows users of financial statements to better assess the entity's ongoing operating performance by separating these extraordinary items from normal recurring operations.

Author: LeetQuiz .