JiangCo Constructs the Following Table in Determining How to Apply

question 27

Multiple Choice

JiangCo constructs the following table in determining how to apply ASC 740-10 to its filing position for a transfer pricing issue. Its book-tax provision for the year, including $3 million for the uncertain transfer pricing issue, is $10 million. $$\begin{array} { c c c } \begin{array} { c } \text { Resulting Estimated } \\\text { Tax Benefit }\end{array} & \begin{array} { c } \text { Probability of Agreement } \\\text { between JiangCo and IRS }\end{array} & \begin{array} { c } \text { Cumulative Probability } \\\text { of Agreement }\end{array} \\\text { \$3 million } & 10 \% & 10 \% \\\text { \$2 million } & 35 \% & 45 \% \\\text { \$1.6 million } & 40 \% & 85 \% \\\text { \$1.1 million } & 15 \% & 100 \%\end{array}$$ Under ASC 740-10, JiangCo's book income tax expense for this item is:

• A) $13 million.
• B) $11.6 million.
• C) $11.4 million.
• D) $10 million.

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Definitions:

Sexual Orientation

A person's pattern of romantic or sexual attraction to others, based on gender.

Clear-cut

A term often used in forestry to describe an area where all trees have been uniformly cut down, also used metaphorically to describe something unmistakably clear or straightforward.

Recreational Interests

Activities or hobbies pursued for enjoyment and relaxation during one's free time.

Financially Security

The state of having stable income or resources to cover living expenses and unforeseen costs, ensuring peace of mind.