Final answer:
An extraordinary item on an income statement reflects unusual and infrequent events. Option (C) Loss from land condemned for public use qualifies as such, since it is not a recurring business operation and is seen as an unusual event.
Step-by-step explanation:
The concept of extraordinary items on an income statement refers to events and transactions that are both unusual in nature and infrequent in occurrence. They are distinct from regular business operations and should not be expected to recur in the foreseeable future. Therefore, when analyzing the options provided:
- (A) Loss resulting from the sale of fixed assets would not be considered an extraordinary item, as the sale of fixed assets can occur as part of regular business activities.
- (B) Gain resulting from the disposal of a segment of the business would typically be classified under 'discontinued operations' rather than an extraordinary item.
- (C) Loss from land condemned for public use is an example of an event that is unusual and infrequent, thus could be considered an extraordinary item.
- (D) Liquidating dividends are distributions to shareholders and are not reported on the income statement.
- (E) Inventory shrinkage costs are a normal part of retail operations and would not qualify as extraordinary items.
Therefore, the correct answer is (C) Loss from land condemned for public use.