Makai Corporation has a potential deduction of up to $1,000 that it would like to claim on

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Makai Corporation has a potential deduction of up to $1,000 that it would like to claim on its current-year tax return. Its tax position meets the recognition threshold of more likely than not, but the deduction cannot be measured by a single amount. The possible outcomes and their probabilities determined by Makai are as follows:

Possible Outcome

Probability

of Occurring

Cumulative Probability

of Occurring

$1,000

10%

10%


$750

30%

40%


$600

25%

65%


$500

15%

80%


$200

10%

90%


$100

5%

95%


0

5%

100%







What amount should Makai deduct on its financial statements according to ASC 740?

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Taxation For Decision Makers 2017

ISBN: 9781119330417

2017 Edition

Authors: Shirley Dennis-Escoffier, Karen A. Fortin

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