Company involving in a tax dispute

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During 2011, Jackson Company became involved in a tax dispute with the IRS. At December 31, 2011, Jackson's tax adviser believed that an unfavorable outcome was probable and a reasonable estimate of additional taxes was $500,000 but could be as much as $650,000. After the 2011 financial statements were issued, Jackson received and accepted an IRS settlement offer of $550,000. What amount of accrued liability would Jackson have reported in its December 31, 2011, balance sheet?

A) $650,000

B) $550,000

C) $500,000

D) $0

Reference no: EM13145622

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