Rastelle deducted an expense of 1,600,000. The outcome is binary: the deduction is either allowed in full or disallowed in full; the probability of disallowance is 65% (case data). Tax rate: 25%. Rastelle concludes that the most likely amount better predicts the resolution. Compute the additional tax to recognise.
- Expense deducted
- 1,600,000
- Tax rate (%)
- 25 %
- Probability of disallowance (%)
- 65 %