Use the information below to answer #$14-16$:

$14.$ Maddow Inc. has taken a position in its $2020$ tax return and claims that it will save the company $$10$ million $($direct reduction of current tax payment$).$ Maddow Inc. has determined that its sustainability is $$more likely than not$,$ based on the claims technical merits $($i$.$e$.$ probable to uphold some of its benefit position$).$ Management$$s estimate of the likelihood of various amounts of benefit are:

Amount of tax benefit to be sustained $$10$ $$9$ $$8$ $$7$

Percentage likelihood $10\%25\%20\%45\%$

Pretax accounting income is $$60$ million and the tax rate is $40\%.$

What amount was recorded for Liability for Unrecognized Tax Benefits by Maddow Inc. in its $2020$ financial statements:

a$.$ $$2$ million

b$.$ $$8$ million

c$.$ $$10$ million

d$.$ $$0$ million

Since USD $8$ million is the largest amount of benefit that is greater than $50\%$ likely to be realized upon ultimate settlement, Maddow Inc. should recognize a tax benefit of USD $8$ million in its financial statements. So$,$ the amount recorded as Liability for Unrecognized Tax benefit by maddow inc. is USD $2$ million $(10$ million $-8$ million$).$

$15.$ Using the same information in the previous question:

In the resolution of the uncertainty, assume the firm experiences the worst case scenario. The journal entry will include a:

a$.$ Debit to income tax payable for $$10$

b$.$ Debit to income tax expense for $$8$

c$.$ Credit to income tax expense for $$2$

d$.$ Credit to Liability for Unrecognized Tax Benefits for $$2$

Dr$.$ Income Tax Expense $8$

Dr$.$ Liability$-$ Uncertain Tax Position $2$

Cr$.$ Income Tax Payable $10$

$16.$ Using the same information in the previous question:

Assume that Red Hat had determined that the sustainability of the tax benefit was $$not$$ more likely than not $($i$.$e$.$ assume Step $1$ had failed and Maddow would not uphold its position$).$ Maddow$$s initial journal entry would include a:

a$.$ Debit to income tax expense for $$16$

b$.$ Credit to income tax payable for $$24$

c$.$ Credit to Unrecognized Tax Benefits for $$2$

d$.$ Debit to income tax expense for $$24$

$20.$ Under the cost method of accounting for treasury stock, the October $1,2021$ sale of the treasury stock would:

a$.$ Reduce retained earnings by $21,000$

b$.$ Reduce retained earnings by $9,000$

c$.$ Reduce retained earnings by $30,000$

d$.$ Reduce paid in capital...

$22.$ The shareholders equity section of the Time Company's comparative balance sheet for the years ended Dec $31,2021$ and $2020,$ reported the following data:

$20212020$

Common stock, $$1$ par per share $646617$

PIC$-$ excess of par $382317$

Retained Earnings $662617$

During $2021,$ time declared and paid cash dividends of $107$ million. The company also declared and issued a small stock dividend. No other changes occurred in shares outstanding during $2021.$ What was Time$$s net income for $2021?$

a$.246$ million

b$.181$ million

c$.152$ million

d$.45$ million

$27.$ On the payment date, Holmes INC will record a:

a$.$ Credit to investment in IRO stock of $20,000$

b$.$ Debit to retained earnings of $20,000$

c$.$ Debit to loss on investment of $20,000$

d$.$ Credit to property dividends payable of $20,000$