Jensen Corporation plans to take a deduction on its tax return that it believes it is more likely than not that it will be sustained. It is not sure, however, of the exact amount that will be realized. It has established the following amounts and probabilities:
$\begin{array}{ll}\text { Possible Deduction }&\text { Probability of Occurrence }\
\$ 40,000 & .20 \
\$ 35,000 & .30 \
\$ 30,000 & .30 \
\$ 20,000 & .20
\end{array}$ What deduction should Jensen record on its financial statement?

Question

Jensen Corporation plans to take a deduction on its tax return that it believes it is more likely than not that it will be sustained. It is not sure, however, of the exact amount that will be realized. It has established the following amounts and probabilities:
 $\begin{array}{ll}\text { Possible Deduction }&\text { Probability of Occurrence }\
\$ 40,000 & .20 \
\$ 35,000 & .30 \
\$ 30,000 & .30 \
\$ 20,000 & .20
\end{array}$ What deduction should Jensen record on its financial statement?

Quizplus · Accepted Answer

The Answer of Jensen Corporation plans to take a deduction on its tax return that it believes it is more likely than not that it will be sustained. It is not sure, however, of the exact amount that will be realized. It has established the following amounts and probabilities:
 $\begin{array}{ll}\text { Possible Deduction }&\text { Probability of Occurrence }\
\$ 40,000 & .20 \
\$ 35,000 & .30 \
\$ 30,000 & .30 \
\$ 20,000 & .20
\end{array}$ What deduction should Jensen record on its financial statement?

Jensen Corporation Plans to Take a Deduction on Its Tax