17 The corporate tax rate was 40% in US prior to The Tax Cuts and Jobs Act of 2017 when it fell to 21%,and 12.5% in Ireland. A multinational that sources components in the US for use in a manufacturingplant in Ireland will set an internal price for the US-made component that is to make its USbranch appear profitable.O High, lessO Low, lessO High, moreO Low, more

Corporate tax refers to the tax rate charged on the profits of the corporation. These are paid on…

Answered: O Low, more

Business

Finance

O Low, more

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter16: Multijurisdictional Taxation

Section: Chapter Questions

Problem 19P

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Given: A company XYZ in the United States is profitable and pays taxes. XYZ produces “widgets”, and in recent years, the cost of producing each widget has been falling because the price of raw materials has been falling. Each year for the past few years, XYZ has produced significantly more widgets each year than it has sold. True or False: XYZ would report lower Net Income on the Income Statement if it used FIFO accounting versus if it used LIFO accounting Explain your answer.
Assume the U.S. corporate income tax rate is 40 percentand the Mexican corporate income tax rate is 30 percent.Jacques International Apparel Company has subsidiaries inboth the U.S. and Mexico. Jacques is trying to decide whattransfer price to use for its famous French frock, whichis being transferred from the U.S. subsidiary to theMexican subsidiary. It could ship the frock at the marketprice of $75 or at cost plus 20 percent. The cost of the frockis $40. Which transfer price would minimize Jacques’s taxburden?a. $75.b. $48.c. $90.d. $75 $40 $35.
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KS Inc. produces a product in the United Kingdom at a cost of £0.55 per unit which it then sells in France for €1.25 per unit. If in the currency markets, 1 U.S. dollar = £0.6373 and 1 U.S. dollar = €1.0279, how much profit is realized by KS Inc. on each unit of product sold? * $0.7857 $0.3531 $0.2571 $0.1095 When the supply for money increases and the demand for money reduces, there will be * A fall in the level of prices An increase in the rate of interest A fall in the level of demand A decrease in the rate of interest
MMA plc., is a UK-based manufacturer of heavy machine components for the power industry. MMA exports a significant proportion of its products to clients in the US. In order to compete with other US suppliers of heavy machine components, MMA prices its exports in US dollars. It is March 2021 and MMA has just shipped a large consignment worth $50 million to TLP Inc., one of MMA’s major clients in the US. Payment for this shipment is due in 90-days. MMA treasury department is concerned about the recent volatility of the dollar[1]pound exchange rates and has suggested that its exposure to the US dollar should be hedged. The following currency and money market quotes are available today: Spot Rate (bid – ask): US$1.5077/£ - US$1.5379/£ Barclays 90-day forward quote ((bid – ask): US$1.5025/£ - US$1.5432 90-day dollar deposit interest rate: 0.8% per annum 90-day pound deposit interest: 1.2% per annum 90-day US dollar borrowing rate: 1.2% per annum 90-day pound borrowing rate: 1.8% per annum…
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…
BMW, owner of the BMW, Mini, and Rolls-Royce brands, has been a major presence in Europe since 1916. The company still sells 46 percent of its cars in Europe, and growth is highest there. However, China is becoming one of BMW’s most important markets. In 2016, the company sold over 520,000 cars in China, and BMW has turned to the Chinese market as a primary focus for future sales. Despite rising sales revenues, BMW is conscious that its profits are often wiped out by changes in exchange rates. The company has pointed out that it was hit particularly hard by China’s currency devaluation in late 2015. BMW Brilliance Automotive Co. Ltd., BMW’s subsidiary in China, imports about half its components from Europe and elsewhere, and it faced major declines in profit because of the negative effects of unfavorable exchange rates. However, BMW did not want to pass those exchange rate costs on to consumers through price increases. Its rival, Porsche, had done that in the United States at the end…
BMW, owner of the BMW, Mini, and Rolls-Royce brands, has been a major presence in Europe since 1916. The company still sells 46 percent of its cars in Europe, and growth is highest there. However, China is becoming one of BMW’s most important markets. In 2016, the company sold over 520,000 cars in China, and BMW has turned to the Chinese market as a primary focus for future sales. Despite rising sales revenues, BMW is conscious that its profits are often wiped out by changes in exchange rates. The company has pointed out that it was hit particularly hard by China’s currency devaluation in late 2015. BMW Brilliance Automotive Co. Ltd., BMW’s subsidiary in China, imports about half its components from Europe and elsewhere, and it faced major declines in profit because of the negative effects of unfavorable exchange rates. However, BMW did not want to pass those exchange rate costs on to consumers through price increases. Its rival, Porsche, had done that in the United States at the end…
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.
A Chinese automobile company is going to use one of its unused manufacturing plants in China to produce 20,000 cars a year. The cars will then be sold in the United States for $40,000 per vehicle. The plant has been fully depreciated. Production and assembly costs in China will be RMB 120,000 per vehicle and selling and administrative costs in the U.S. will be $30 million per year. The company will pay taxes in China at a rate of 35% and will not pay taxes in the U.S. Assume the current exchange rate is 7 RMB/$. It is expected that the plant will operate for 5 years and then cease operations. What are the expected yearly sales, expressed in RMB, assuming the current exchange rate? 5,600,000,000 800,000,000 560,000,000 3,600,000,000 What is the expected yearly net after-tax cash flow, expressed in RMB, assuming the exchange rate stays constant? 5,600,000,000 1,943,500,000 3,170,000,000 2,990,000,000 What is the change in cash flow, in RMB, if the RMB appreciates to 6.5…
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.…