What type of income is 'Gain on Sale'?

'Gain on Sale' refers to the profit a company makes when it sells an asset for more than its original cost. This type of income is categorized as Non-Operating Income because it does not stem from the central activities or regular operations of the business. Instead, it usually arises from incidental transactions related to the sale of long-term assets, such as property, equipment, or investments.

Non-Operating Income is generally considered to be separate from core business earnings, as it is not generated from the sale of goods or services that constitute the main business operations. This distinction is important for users of financial statements, as it helps them understand the sustainability and volatility of a company’s earnings. For example, while core operational revenue reflects the primary business activities, gains on sales may fluctuate based on asset sales, making them less predictable.

In this context, while other choices like Operational Revenue or Other Income might seem related, they do not accurately define the nature of a 'Gain on Sale', which is specifically linked to non-operating activities.