Answer (D) is correct . Certain items ordinarily are not to be treated as extraordinary gains and losses. Rather, they are included in the determination of income from continuing operations. These gains and losses include those from write-downs of receivables and inventories, translation of foreign currency amounts, disposal of a business segment, sale of productive assets, strikes, and accruals on long-term contracts. A write-down of inventory is therefore included in the computation of income from continuing operations.
Answer (A) is incorrect because Discontinued operations are reported separately from income from continuing operations.
Answer (B) is incorrect because Extraordinary loss is reported separately from income from continuing operations.
Answer (C) is incorrect because A cumulative effect of a change in an accounting principle is not reported in the income statement.
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