Which of the Following Statements Best Describes the ASC 740

question 55

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 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:

Case Study Method

A research strategy that involves an in-depth investigation of a single subject, group, or event to explore causation in order to find underlying principles.

In-depth Investigation

A comprehensive and detailed examination of a subject or issue, aiming to uncover deeper insights or facts.

Naturalistic Observation Method

A research methodology where subjects are observed in their natural environment without any manipulation by the observer.

Careful Surveillance

The meticulous observation or monitoring of behaviors, activities, or information for the purpose of influence, management, or protection.