Financial accounting income statement

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Reference no: EM135800

A corporate taxpayer has an income tax expenditure recorded on its preliminary financial statements if $13,000,000. The only difference between the actual tax liability and the preliminary financial accounting tax expense is a tax position not yet reflected in the financial statements that will result in a tax savings this year of $1,000,000. The company considers that if it were audited on that tax position, there is a 40 percent chance that the IRS would disallow the whole amount. There is a 60% probability, thus, that the IRS would not allow any portion of the amount. How could the $1,000,000 be reflected in the financial accounting income statement?

Reference no: EM135800

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