Real-world examples of non-operating income and expenses

The best examples of non-operating income and expenses in practice

Accountants can argue theory all day, but investors care about real examples of non-operating income and expenses that move earnings per share. Non-operating items sit below operating income and come from activities outside a company’s main business model. Think: a retailer earning interest on its cash, or a manufacturer taking a loss on a lawsuit.

Here’s the key mindset: operating items tell you how good the company is at its core business. Non-operating items tell you everything else.

Some of the best examples of non-operating income and expenses that you’ll see again and again include:

• Interest income on surplus cash and investments
• Interest expense on bank loans and bonds
• Gains and losses on investments or asset sales
• Foreign exchange gains and losses
• Restructuring and one-time charges
• Impairment losses on goodwill or long-lived assets
• Litigation gains and losses
• Pension and other post-retirement benefit adjustments

Let’s walk through these with real examples and the kinds of disclosures you’ll actually see in filings.

Interest income and interest expense: the classic example of non-operating items

If you’re looking for the most common example of non-operating income and expenses, start with interest.

Interest income: earning money from cash, not customers

When a company parks excess cash in short-term securities or bank deposits, it earns interest income. For a manufacturer or retailer, this is non-operating. Their core business is selling products, not clipping coupons from Treasury bills.

In 2024–2025, this category has become much more important. After years of near-zero rates, companies are earning meaningful yields on cash again. For instance, large U.S. corporations with billions in cash equivalents can now earn hundreds of millions in interest income simply by holding short-term Treasuries or high-grade commercial paper.

You’ll often see a line in the income statement labeled something like:

“Interest income and other, net”

For companies outside of financial services, this is typically reported below operating income and treated as non-operating.

Interest expense: the cost of capital shows up below the line

On the flip side, interest expense on bank loans, bonds, and other borrowings is usually a non-operating expense for non-financial companies. A consumer products company doesn’t exist to generate interest expense; that’s just the cost of financing its operations and acquisitions.

A typical income statement presentation might show:

Operating income

Interest expense

Other income (expense), net

Income before income taxes

For valuation, analysts often look at operating income (or EBIT) before interest, to compare companies regardless of their capital structure. That’s why interest is one of the clearest examples of non-operating income and expenses.

Gains and losses on investments: when the stock portfolio matters more than sales

Another rich category for examples of non-operating income and expenses is gains and losses on investments. Many companies hold equity stakes, bonds, or joint ventures that are not part of their core operations.

Realized and unrealized gains and losses

Companies may record:

• Realized gains or losses when they sell a security or investment
• Unrealized gains or losses from changes in fair value that are required to be recognized in earnings under accounting standards

For a software company that happens to own a portfolio of tech stocks, a big swing in the stock market can create large non-operating gains or losses. These items can make net income very volatile, even when the underlying business is stable.

A typical disclosure might read:

“Other (income) expense, net, includes net unrealized gains (losses) on equity investments of $X for the year ended December 31, 2024.”

Because these gains and losses are not tied to the company’s main business activities, they’re prime examples of non-operating income and expenses.

Strategic equity stakes and venture investments

In 2024–2025, more large companies—especially in tech and healthcare—hold meaningful stakes in startups or strategic partners. When those investees go public, get acquired, or get written down, the parent company records non-operating gains or losses.

This is where you’ll see headlines like “Company X beats earnings on investment gain” even though operating margins were flat. Analysts will often strip these out to focus on core operating performance.

For background on how U.S. GAAP treats these items, you can review the FASB and SEC guidance summarized by educational institutions such as Harvard Business School Online (harvard.edu).

Asset sales and impairments: non-operating hits that confuse trends

Some of the most dramatic examples of non-operating income and expenses come from selling or writing down assets.

Gains on the sale of property, plants, and equipment

When a company sells a factory, office building, or piece of equipment for more than its carrying value, it records a gain on sale. Because the business is not in the business of flipping real estate or machinery (unless it literally is), this gain is non-operating.

You’ll see language such as:

“Gain on sale of building recorded in other income (expense), net.”

These gains can temporarily inflate net income, but they don’t say much about the company’s ability to generate recurring profit from its core operations.

Impairment losses: goodwill, trademarks, and long-lived assets

On the other side, impairment losses occur when the carrying amount of an asset exceeds its recoverable amount. Think of a retailer closing underperforming stores, or a media company writing down a content library.

Common impairment examples include:

• Goodwill impairments after an acquisition underperforms
• Trademark or brand impairments when future cash flows fall short
• Long-lived asset impairments for plants, equipment, or right-of-use assets

These are classic examples of non-operating income and expenses because they are infrequent, often large, and not directly tied to the current period’s operating activities.

U.S. GAAP guidance on impairments is summarized by the Financial Accounting Standards Board (FASB); you can find technical materials via the FASB website (fasb.org), though they’re written more for professionals than casual readers.

Restructuring costs and one-time charges: the gray area

Restructuring is where the line between operating and non-operating gets fuzzy. Many companies present restructuring charges below operating income and treat them as non-operating, especially when they are:

• Related to major workforce reductions
• Plant closures or consolidations
• Exit of a business line or geographic market

These charges might include severance, contract termination fees, and asset write-downs. They are often labeled as “restructuring and other charges” and can be some of the biggest real examples of non-operating income and expenses in a given year.

Investors tend to be skeptical when restructuring becomes a recurring habit. One year of restructuring might be a cleanup; five years in a row starts to look like poor planning disguised as a non-operating item.

Regulators like the U.S. Securities and Exchange Commission (SEC) pay attention to how companies label and adjust for these items. The SEC’s investor education materials on financial statements, available at Investor.gov (a U.S. government site), are a solid starting point for understanding how to interpret these disclosures.

Foreign exchange and derivatives: non-operating but very real

For multinational companies, currency swings are a constant headache. Many of the best examples of non-operating income and expenses in global businesses come from foreign exchange (FX) and derivative positions.

Foreign exchange gains and losses

FX gains and losses arise when:

• Foreign-currency receivables and payables are remeasured
• Cash balances in foreign currencies move with exchange rates
• Intercompany loans are denominated in non-functional currencies

Most companies treat these as non-operating, reported in “other income (expense), net.” In a volatile currency environment, these FX items can overshadow small changes in operating profit.

Derivative gains and losses

Companies also use derivatives—like forwards, swaps, and options—to hedge interest rate risk, commodity prices, or FX exposure. Accounting for derivatives is complex, but the bottom line is simple: many derivative gains and losses show up below operating income and are treated as non-operating.

For example, an airline might hedge jet fuel costs. The mark-to-market gain or loss on the hedge instruments may be recorded in non-operating income or expense, depending on the hedge accounting treatment. Again, these are examples of non-operating income and expenses that can move net income even when underlying operations are steady.

Litigation, fines, and settlements: expensive surprises below the line

Legal issues create some of the most eye-catching real examples of non-operating income and expenses.

Litigation expenses and settlements

When a company settles a lawsuit or records an adverse judgment, it may recognize a litigation expense that is not part of its day-to-day operations. Examples include:

• Product liability settlements
• Regulatory fines and penalties
• Class-action lawsuit settlements

Many companies present these items in “other income (expense)” or as a separate line below operating income. Analysts often adjust for them when they are clearly one-off and not representative of ongoing risk.

Litigation gains

It cuts both ways. If a company wins a major lawsuit or receives a large settlement, it may record a litigation gain in non-operating income. That can create a one-time bump to earnings that has nothing to do with selling more products or improving margins.

These legal items are useful examples of non-operating income and expenses because they highlight why you can’t judge performance on net income alone.

Pension and retirement benefit adjustments: accounting noise with real cash impact

Defined benefit pension plans and other post-retirement benefits can also generate significant non-operating income or expenses.

Typical components include:

• Expected return on plan assets
• Interest cost on the pension obligation
• Actuarial gains and losses from changes in assumptions (discount rates, life expectancy, etc.)

Many companies present the service cost component in operating expense, while the other components appear in non-operating income or expense. That means pension accounting can create large swings in non-operating results without any change in the underlying business.

This is especially relevant for older industrial companies and public-sector entities. Educational resources from organizations like the Governmental Accounting Standards Board (GASB) (gasb.org) explain how pension obligations and related expenses are reported for governments and can provide context for similar concepts in corporate reporting.

Why these examples of non-operating income and expenses matter in 2024–2025

In a low-rate, low-volatility world, non-operating items were easy to ignore. That’s no longer the case. As of 2024–2025:

• Higher interest rates mean interest income and interest expense are bigger drivers of net income.
• More restructuring and layoffs across tech, retail, and media mean larger restructuring charges and impairment losses.
• Volatile markets make investment gains and losses, FX swings, and derivative marks more significant.

That’s why understanding examples of non-operating income and expenses isn’t an academic exercise—it’s a survival skill for anyone reading financial statements.

When you analyze a company, it’s worth asking:

• How much of net income comes from the core business versus non-operating items?
• Are non-operating gains or losses recurring or clearly one-time?
• Is management consistently labeling similar items as non-operating, or moving the goalposts?

Smart investors and lenders often build two views:

• Reported net income, including all non-operating items
• Adjusted operating performance, stripping out selected non-operating income and expenses

The gap between those two numbers tells you a lot about the quality and sustainability of earnings.

FAQ: Common questions about examples of non-operating income and expenses

Q: What are the most common examples of non-operating income and expenses on an income statement?
The most common items are interest income, interest expense, gains and losses on investments, foreign exchange gains and losses, restructuring charges, impairment losses, and certain litigation gains or losses. These are classic examples of non-operating income and expenses because they arise from financing, investing, or unusual events rather than the company’s core business operations.

Q: Can the same item be operating for one company and non-operating for another?
Yes. An item is non-operating only if it’s outside the company’s main business. Interest income is non-operating for a manufacturer but operating for a bank. Gains on securities trading are non-operating for a retailer but operating for a brokerage firm. Context matters.

Q: How do analysts treat these examples of non-operating income and expenses when valuing a company?
Analysts usually focus on metrics like operating income, EBIT, or EBITDA, which exclude most non-operating items. They may also adjust for large, one-time non-operating gains or losses to get a cleaner picture of recurring earnings. However, they still pay attention to non-operating items because they affect cash flow, risk, and capital structure.

Q: Are restructuring charges and impairment losses always non-operating?
Not always, but they are often presented that way, especially when they are large and clearly tied to a specific event (like a major acquisition gone wrong or a strategic exit from a business line). Some companies include smaller restructuring costs in operating expenses. The key is to read the footnotes and management discussion to see how the company defines and classifies these items.

Q: Where can I learn more about interpreting these examples of non-operating income and expenses?
For a plain-language introduction to income statements and non-operating items, the SEC’s investor education page at Investor.gov is a good starting point. For more advanced accounting detail, educational sites like Harvard Business School Online provide accessible explanations of how different income statement items work together.