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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Related Book For
Taxation For Decision Makers 2017
ISBN: 9781119330417
2017 Edition
Authors: Shirley Dennis-Escoffier, Karen A. Fortin
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