An income statement shows "income before income taxes and extraordinary items" in the amount of $2,055,000.The income taxes payable for the year are $1,080,000, including $360,000 that is applicable to an extraordinary gain.Thus, the "income before extraordinary items" is

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To find the "income before extraordinary items," subtract the income taxes applicable to ordinary income from the "income before income taxes and extraordinary items." The ordinary income tax is $1,080,000 - $360,000 = $720,000. Therefore, $2,055,000 - $720,000 = $1,335,000.

An Income Statement Shows "Income Before Income Taxes and Extraordinary