Eastwood Manufacturing planned to claim a $10,000 credit for increasing research activities (an R & D credit)on its 2014 income tax return.Although some portion of the credit is at risk,management believes that it is "more likely than not" that the reporting entity will qualify for all or a portion of the R & D credit.As a result,recognition will be limited to only a portion of the amount claimed on the Company's income tax return.
Given that the credit meets the more-likely-than-not threshold,management must measure
the amount to be recognized.Accordingly,management has estimated the range of possible outcomes regarding the amount of the credit to be allowed,and the related likelihoods,as follows:

Required:
1.Determine the amount of the tax position that would be recognized in Eastwood Manufacturing's financial statements.
2.Determine the amount of the liability for unrecognized income tax benefits that would appear on Eastwood Manufacturing's balance sheet.

Question

Eastwood Manufacturing planned to claim a $10,000 credit for increasing research activities (an R & D credit)on its 2014 income tax return.Although some portion of the credit is at risk,management believes that it is "more likely than not" that the reporting entity will qualify for all or a portion of the R & D credit.As a result,recognition will be limited to only a portion of the amount claimed on the Company's income tax return.
Given that the credit meets the more-likely-than-not threshold,management must measure
the amount to be recognized.Accordingly,management has estimated the range of possible outcomes regarding the amount of the credit to be allowed,and the related likelihoods,as follows:
  
Required:
1.Determine the amount of the tax position that would be recognized in Eastwood Manufacturing's financial statements.
2.Determine the amount of the liability for unrecognized income tax benefits that would appear on Eastwood Manufacturing's balance sheet.

Quizplus · Accepted Answer

The Answer of Eastwood Manufacturing planned to claim a $10,000 credit for increasing research activities (an R & D credit)on its 2014 income tax return.Although some portion of the credit is at risk,management believes that it is "more likely than not" that the reporting entity will qualify for all or a portion of the R & D credit.As a result,recognition will be limited to only a portion of the amount claimed on the Company's income tax return.
Given that the credit meets the more-likely-than-not threshold,management must measure
the amount to be recognized.Accordingly,management has estimated the range of possible outcomes regarding the amount of the credit to be allowed,and the related likelihoods,as follows:
  
Required:
1.Determine the amount of the tax position that would be recognized in Eastwood Manufacturing's financial statements.
2.Determine the amount of the liability for unrecognized income tax benefits that would appear on Eastwood Manufacturing's balance sheet.

Eastwood Manufacturing Planned to Claim a $10,000 Credit for Increasing