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What is meant by nonoperating expenses and losses?

Author:
Harold Averkamp, CPA, MBA

Definition of Nonoperating Expenses and Losses

Nonoperating expenses are business expenses that are outside of a company’s main or central operations. (Some describe them as incidental or peripheral.)

Losses often involve the disposal of property, plant and equipment for a cash amount that is less than the carrying amount (or book value) of the asset sold.

Nonoperating expenses and losses are often reported on the income statement after the subtotal Income from operations and will often appear with the caption Other income and (expenses).

Examples of Nonoperating Expenses and Losses

A common example on a nonoperating expense is the interest expense incurred by a retailer or manufacturer. The retailer’s main operations are purchasing and selling merchandise. The manufacturer’s main operation are producing and selling its products. Borrowing money is outside of these businesses’ main or central operations.

An example of a loss is the retailer’s disposal of one of its delivery trucks for a cash amount that is less than the truck’s carrying amount. Another example is a loss from a settlement of a lawsuit.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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