Morgan Corporation determined that $2,000,000 of its domestic production activities deduction on its current year tax return was uncertain, but that it was more likely than not to be sustained on audit. Management made the following assessment of the company's potential tax benefit from the deduction and its probability of occurring. $\begin{array}{lll}
\begin{array}{c}
\text { Potential Estimated }\
\text { Benefit (000s) } \
\hline \$ \mathbf{6 8 0 , 0 0 0} \
\mathbf{5 1 0 , 0 0 0} \
\mathbf{3 4 0 , 0 0 0} \
0
\end{array}
\begin{array}{c}
\text {Individual Probability}\
\text { of Occurring (\%) } \
\hline 20 \
25 \
30 \
15\
\end{array}
\begin{array}{c}
\text { Cumulative Probability } \
\text { of Occurring } \
\hline 20 \
55 \
85 \
100
\end{array}
\end{array}$

Question

Quizplus · Accepted Answer

The Answer of Morgan Corporation determined that $2,000,000 of its domestic production activities deduction on its current year tax return was uncertain, but that it was more likely than not to be sustained on audit. Management made the following assessment of the company's potential tax benefit from the deduction and its probability of occurring. $\begin{array}{lll}
\begin{array}{c}
\text { Potential Estimated }\
\text { Benefit (000s) } \
\hline \$ \mathbf{6 8 0 , 0 0 0} \
\mathbf{5 1 0 , 0 0 0} \
\mathbf{3 4 0 , 0 0 0} \
0
\end{array}
\begin{array}{c}
\text {Individual Probability}\
\text { of Occurring (\%) } \
\hline 20 \
25 \
30 \
15\
\end{array}
\begin{array}{c}
\text { Cumulative Probability } \
\text { of Occurring } \
\hline 20 \
55 \
85 \
100
\end{array}
\end{array}$

Morgan Corporation Determined That $2,000,000 of Its Domestic Production Activities