Which of the Following Statements Best Describes the ASC 740

question 115

Multiple Choice

Which of the following statements best describes the ASC 740 process for evaluating a company's uncertain tax positions?

• A)ASC 740 requires a company to complete a two-step analysis every time it evaluates its uncertain tax positions.
• B)ASC 740 requires a company to complete Step 2 (measurement)in its evaluation of its uncertain tax positions only if it is more likely than not that its tax position will be sustained on its merits (recognition).
• C)ASC 740 allows a company to take into account the probability of audit by a tax authority in Step 1 (measurement)in its evaluation of its uncertain tax positions.
• D)ASC 740 allows a company to record a tax benefit from an uncertain tax position only if it is probable the benefit will be sustained on audit by a tax authority.

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Definitions:

Duty

Obligation required by law or morality to act or refrain from acting in a certain manner towards others.

Waiting Period

A mandatory interval of time between the initiation of an action and its actual application, such as between filing an insurance claim and receiving benefits.

Filing Date

The filing date refers to the specific day on which a document is officially submitted or recorded with a governmental or legal office.

Effective Date

The date on which an agreement, policy, or regulation becomes enforceable or active.