Ordinary or extraordinary or exceptional item

As per AS-5  

Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly  

Para 8 of AS-5 States Extraordinary items should be disclosed in the statement of profit and loss as a part of net profit or loss for the period.

The nature and the amount of each extraordinary item should be separately disclosed in the statement of profit and loss in a manner that its impact on current profit or loss can be perceived.  

Both the transactions that is loss from earthquake and compensation are extra ordinary in nature therefore seperate disclosure should be preffered      Having regards to the words "in a manner that its impact on current profit or loss can be perceived" Even the second option (net of expense appears correct 'cause correct picture of P&L can be perceived .

(In my View)But to be on safer side 1st option is better (i.e seperately disclosing EACH item)   btw   Para 11 includes eathquake as one of the event or transaction which may lead to extraordinary item.
 

It is important for us to understand whether the same is being treated as an exceptional item or an extra-ordinary  item.

It is to be noted that an exceptional item is not same  as an extra-ordinary item.  While the former is derieved from ordinary business transactions , extra-ordinary items are material and not part of a company's ordinary business dealings.

Accordingly, the claim received is an extra-ordinary activities since the claim received on damage stock is not a part of ordinary activity of the concern.

Further, as per revised schedule VI , the net impact of extra-ordinary or exceptional items needs to be disclosed on the face onf profit and loss account and details to be provided in the notes to accounts forming a part of finnacial statments.

Hence, the claim received net of any expenses incurred for getting that claim should be disclosed as an extra-ordinary activity on the face of profit and loss account.