Terrell Toy Company uses an acceptable tax method that provided a $ 10,000 tax deduction for the

Question:

Terrell Toy Company uses an acceptable tax method that provided a $ 10,000 tax deduction for the current year. and taxable income before considering this tax deduction are equal to $ 245,000 ( i. e., to$245,000(i.e., there are no book- tax differences). Terrell is subject to a 35% income tax rate. Tax authorities have challenged this type of tax deduction in the past and Terrell is now concerned about the realizability of this tax deduction in the future. However, management believes that it is more likely than not that the firm will sustain the tax benefits upon examination by tax authorities. Terrell provides the following analysis regarding the probabilities of sustaining the tax deduction:
Amount Sustained Probability
$ 10,000 30%
8,000 15%
6,000 10%
2,000 45%
Prepare the journal entry required to record the tax provision for the current year, assuming that Terrell is subject to a 35% tax rate. GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...