Billabong Fashion is based in Melbourne, Australia. Billabong Fashion has a subsidiary in Shanghai that generates RMB85 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Belle Fashion is the close competitor of Billabong Fashion. Belle Fashion is a local Australian company located in Japan with annual export sale to Malaysia of about MYR 45 million. Based on the information provided, which firm is subject to a higher degree of translation exposure? Justify your answer with thorough explanation on both companies.
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- Billabong Fashion is based in Melbourne, Australia. Billabong Fashion has a subsidiary in Shanghai that generates RMB85 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Belle Fashion is the close competitor of Billabong Fashion. Belle Fashion is a local Australian company located in Japan with annual export sale to Malaysia of about MYR 45 million. Based on the information provided, which firm is subject to a higher degree of translation exposure? Justify your answer with thorough explanation on both companies.
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- ABC Inc. is a U.S. firm with annual export sales to Canada of about C$500 million. Its main competitor is XYZ Inc., also based in the United States, with a subsidiary in Canada that generates about C$500 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Based on the information provided, which company is subject to a higher degree of translation exposure? Explain.a) Mashimoto Electric is based in Osaka, Japan. Mashimoto Electric has a subsidiary inSingapore that generates SGD 50 million in annual sales. Any earnings generated by thesubsidiary are reinvested to support its operations. Benzai Electric is the close competitor ofMashimoto Electric. Benzai Electric is a local Japanese company located in Japan with 2 annual export sale to Singapore of about SGD 50 million. Based on the informationprovided, which firm is subject to a higher degree of translation exposure? Justify youranswer with thorough explanation on both companies.b) Diamond Limited, a New Zealand company has an Australian subsidiary that earnedAUD40 million this year. Little Limited, which is also resided in New Zealand has anAustralian subsidiary that earned AUD30 million this year. The subsidiary of DiamondLimited plans to reinvest its earnings in Australia while the subsidiary of Little Limitedplans to remit its earnings to the New Zealand parent. Another New Zealand…New Life is a multinational distribution company that started operating a Branch in Barbados on 1 January 2023. The company’s Head Office is in the Cayman Islands and is part of a group which earns more than USD 850 million for the year. It employed some of its staff from Barbados and imports good and services from the US, Cayman Islands, and other Caribbean countries. New Life repatriation policy is to transfer 50 % to 70% of its after-tax profits to the Cayman Islands. The company was of the view that for the first year of operation there was a window of no tax obligations. In December 2023, the company realized that their understanding was not correct and therefore engaged UWI Tax Consulting Services Limited to provide tax advisory and tax compliance services. Your Group was assigned this engagement. Required.Advice New Life of the tax matters that needs to be considered when operating in Barbadosincluding any tax benefits or incentives they may consider.
- Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…
- compeny,whose products are sold in 30 countries worldwide, is an integrated Canadian forest products company. compeny sells the majority of its lumber products in the United States and a significant amount of its pulp products in asia.Demon also has loans from other countries. For example, on June 18, 2018, the company borrowed US$160 million at an annual interest rate of 12%. compeny must repay this loan, and interest, in U.S.dollars One of the challenges global companies face is to make themselves attractive to investors from other currencies. This is difficult to do when different accounting rules in different countries blur the real impact of earnings. For example, in 2018 compenyreported a loss of $2.3 million, using a accounting rules.Had it reported under U.S. accounting rules, its loss would have been $12.1 million. Many companies that want to be more easily compared with U.S and other global competitors have switched to U,S. accounting principles. a National Railway.…Doman Industries Ltd., whose products are sold in 30 countries worldwide, is an integrated Canadian forest products company. Doman sells the majority of its lumber products in the United States and a significant amount of its pulp products in asia.Demon also has loans from other countries. For example, on June 18, 2018, the company borrowed US$160 million at an annual interest rate of 12%. Demon must repay this loan, and interest, in U.S.dollars One of the challenges global companies face is to make themselves attractive to investors from other currencies. This is difficult to do when different accounting rules in different countries blur the real impact of earnings. For example, in 2018 Doman reported a loss of $2.3 million, using Canadian accounting rules.Had it reported under U.S. accounting rules, its loss would have been $12.1 million. Many companies that want to be more easily compared with U.S and other global competitors have switched to U,S. accounting principles. Canadian…Doman Industries Ltd., whose products are sold in 30 countries worldwide, is an integrated Canadian forest products company. Doman sells the majority of its lumber products in the United States and a significant amount of its pulp products in Asia. Demon also has loans from other countries. For example, on June 18, 2018, the company borrowed US$160 million at an annual interest rate of 12%. The demon must repay this loan, and interest, in U.S.dollars One of the challenges global companies face is to make themselves attractive to investors from other currencies. This is difficult to do when different accounting rules in different countries blur the real impact of earnings. For example, in 2018 Doman reported a loss of $2.3 million, using Canadian accounting rules. Had it reported under U.S. accounting rules, its loss would have been $12.1 million. Many companies that want to be more easily compared with the U.S and other global competitors have switched to U. S. accounting principles.…
- A company,whose products are sold in 30 countries worldwide, is an integrated Canadian forest products company. compeny sells the majority of its lumber products in the United States and a significant amount of its pulp products in asia.Demon also has loans from other countries. For example, on June 18, 2018, the company borrowed US$160 million at an annual interest rate of 12%. compeny must repay this loan, and interest, in U.S.dollars One of the challenges global companies face is to make themselves attractive to investors from other currencies. This is difficult to do when different accounting rules in different countries blur the real impact of earnings. For example, in 2018 compenyreported a loss of $2.3 million, using a accounting rules.Had it reported under U.S. accounting rules, its loss would have been $12.1 million. Many companies that want to be more easily compared with U.S and other global competitors have switched to U,S. accounting principles. a National Railway.…Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the…Taft Corporation operates primarily in the United States. However, a few years ago it opened a plant in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece. Financial information for each of these facilities follows:The company’s domestic (U.S.) operations reported the following information for the current year:Taft has adopted the following criteria for determining the materiality of an individual foreign country: (1) Sales to unaffiliated customers within a country are 10 percent or more of consolidated sales or (2) long-lived assets within a country are 10 percent or more of consolidated long-lived assets.Apply Taft’s materiality tests to identify the countries to report separately with respect to (a) revenues and (b) long-lived assets.