What Confidence Level Must Management Have That a Tax Position

question 72

Multiple Choice

What confidence level must management have that a tax position will be sustained on audit before it can recognize any portion of the related deferred tax asset under ASC 740?

• A)More likely than not.
• B)Reasonable basis.
• C)Substantial authority.
• D)Probable.

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Definitions:

Semiannually

Occurring twice a year; used to describe the frequency with which certain financial or operational events take place, such as interest payments on bonds.

Equity Method

An accounting technique used to record an investor's proportional share of the net income and losses of an investee company in which the investor has significant influence but not full control.

Year-End Adjustment

Journal entries made at the end of an accounting period to account for incomes and expenditures in the correct accounting period.

Lower Of Cost

Refers to the accounting principle of valuing and reporting assets at the lower of its historical cost or the market value.