An income statement shows "income before income taxes and extraordinary items" in the amount of $3,425,000. The income taxes payable for the year are $1,800,000, including $600,000 that is applicable to an extraordinary gain. Thus, the "income before extraordinary items" is

Question

Quizplus · Accepted Answer

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 $1,800,000 - $600,000 = $1,200,000. Therefore, $3,425,000 - $1,200,000 = $2,225,000.

An Income Statement Shows "Income Before Income Taxes and Extraordinary