Denoting those entries printed above the horizontal line on a company’s profit and loss account that separates the profit (or loss) from the entries showing how the profit is distributed. Compare below-the-line.
Prior to the introduction of Financial Reporting Standard (FRS) 3, Reporting Financial Performance, in October 1992, it was understood that any exceptional items that were within the ordinary activities of the business were shown above the line, while any extraordinary items that were outside the ordinary activities of the business were shown below it. There was, however, criticism that the definitions of extraordinary and exceptional items could be manipulated to improve the earnings per share figure. For example, if a building was sold for a large profit it could be interpreted as being exceptional and included in the earnings per share, whereas if it was sold at a loss it could be interpreted as being extraordinary and not included in the earnings per share. With the introduction of FRS 3, virtually all previously extraordinary items have been redefined as exceptional and are therefore shown above the line and included in the earnings per share.