JuarezCo Constructs the Following Table in Determining How to Apply

question 52

Multiple Choice

JuarezCo constructs the following table in determining how to apply ASC 740-10 to its filing position for its domestic production activities deduction. Its book-tax provision for the year, including $3 million for the uncertain transfer pricing issue, is $10 million. $$\begin{array} { c c c } \begin{array} { c } \text { Resulting Estimated Tax } \\\text { Benefit }\end{array} & \begin{array} { c } \text { Probability of Agreement between } \\\text { JuarezCo and IRS }\end{array} & \begin{array} { c } \text { Cumulative Probability of } \\\text { Agreement }\end{array} \\\text { \$3 million } & 10 \% & 10 \% \\\text { \$2 million } & 45 \% & 55 \% \\\text { \$1.6 million } & 40 \% & 95 \% \\\text { \$1.1 million } & 5 \% & 100 \%\end{array}$$ Under ASC 740-10, JuarezCo's book income tax expense for this item is:

• A) $13 million.
• B) $12 million.
• C) $11.4 million.
• D) $11 million.

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Definitions:

Congruence

Refers to the degree of agreement, harmony, or correspondence between two or more things, often used in mathematics, psychology, and interpersonal relationships.

Habitability

A measure of how suitable a particular environment is for supporting life, often referring to housing conditions or the potential of celestial bodies to support life.

Social Design

The creation of social environments and structures with the purpose of improving societal relations and addressing social issues.

Principal Players

Key or leading figures in a particular context, activity, or scenario, who play a significant role in determining its outcome.