Hopkins Company has taken a position in its tax return to claim a tax credit of $70,000 (direct reduction in taxes payable) and has determined that it is "more likely than not" that the tax position will be sustained. The tax credit would be a direct reduction in current taxes payable. Hopkins believes the likelihood that a $70,000, $42,000, or $14,000 tax benefit will be sustained is 20%, 40%, and 40%, respectively. What is the amount of the additional projected liability that should be recognized?
Hopkins Company has taken a position in its tax return to claim a tax credit of $70,000 (direct reduction in taxes payable) and has determined that it is "more likely than not" that the tax position will be sustained. The tax credit would be a direct reduction in current taxes payable. Hopkins believes the likelihood that a $70,000, $42,000, or $14,000 tax benefit will be sustained is 20%, 40%, and 40%, respectively. What is the amount of the additional projected liability that should be recognized?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hopkins Company has taken a position in its tax return to claim a tax credit of $70,000 (direct reduction in taxes payable) and has determined that it is "more likely than not" that the tax position will be sustained. The tax credit would be a direct reduction in current taxes payable. Hopkins believes the likelihood that a $70,000, $42,000, or $14,000 tax benefit will be sustained is 20%, 40%, and 40%, respectively. What is the amount of the additional projected liability that should be recognized?
additional projected liability
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