International Accounting
5th Edition
ISBN: 9781259747984
Author: Doupnik, Timothy S., Finn, Mark T., Gotti, Giorgio
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 28EP
a.
To determine
Calculate the amount of foreign earned income.
b.
To determine
Calculate the amount of foreign tax credit.
c.
To determine
Calculate the amount of income taxes paid.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On December 20, 2017, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2018. Currency exchange rates for 1 ostra are as follows:a. How does the fluctuation in exchange rates affect Butanta’s 2017 income statement?b. How does the fluctuation in exchange rates affect Butanta’s 2018 income statement?
On December 20, 2015, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign company at a price of 50,000 ostras. Payment received on January 10, 2016, Currency exchange rates for 1 ostra are as follows: December 20, 2015 $1.05, December 31, 2015 $1.02 and January 10, 2016 $0.98. How does the fluctuation in exchange rates affect Butanta's 2015 income statement? How does the fluctuation in exchange rates affect Butanta's 2016 income statement?
On December 20, 2020, Momeier Company (a U.S.-based company) sold parts to a foreign customer at a price of 175,000 rials. Payment is received on January 10, 2021. Currency exchange rates are as follows:
Date
U.S. Dollar per Rial
December 20, 2020
$
1.27
December 31, 2020
1.24
January 10, 2021
1.20
How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier’s 2020 income statement?
Chapter 8 Solutions
International Accounting
Ch. 8 - Prob. 1QCh. 8 - Prob. 2QCh. 8 - Prob. 3QCh. 8 - 4. What is the difference between the worldwide...Ch. 8 - Prob. 5QCh. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - 13. What is treaty shopping?
Ch. 8 - What is base erosion and profit shifting (BEPS)?Ch. 8 - What is the purpose of the OECDs base erosion and...
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Prob. 16QCh. 8 - Prob. 17QCh. 8 - Prob. 18QCh. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - Prob. 21QCh. 8 - Prob. 22QCh. 8 - Prob. 23QCh. 8 - Prob. 1EPCh. 8 - Prob. 2EPCh. 8 - Prob. 3EPCh. 8 - 4. Why might companies have an incentive to...Ch. 8 - Prob. 5EPCh. 8 - Prob. 6EPCh. 8 - Prob. 7EPCh. 8 - Prob. 8EPCh. 8 - Prob. 9EPCh. 8 - Prob. 10EPCh. 8 - Prob. 11EPCh. 8 - Prob. 12EPCh. 8 - Prob. 13EPCh. 8 - Prob. 14EPCh. 8 - Prob. 15EPCh. 8 - Prob. 16EPCh. 8 - Prob. 17EPCh. 8 - Prob. 18EPCh. 8 - Prob. 19EPCh. 8 - Prob. 20EPCh. 8 - Heraklion Company (a U.S.-based company) is...Ch. 8 - Prob. 22EPCh. 8 - Prob. 23EPCh. 8 - Prob. 24EPCh. 8 - Prob. 25EPCh. 8 - Prob. 26EPCh. 8 - Prob. 27EPCh. 8 - Prob. 28EPCh. 8 - Prob. 29EPCh. 8 - Prob. 1C
Knowledge Booster
Similar questions
- On December 20, 2017, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2018. Currency exchange rates for 1 ostra are as follows: December 20, 2017 $1.05December 31, 2017 1.02January 10, 2018 0.98a. How does the fluctuation in exchange rates affect Butanta’s 2017 income statement?b. How does the fluctuation in exchange rates affect Butanta’s 2018 income statement?arrow_forwardABC Corp., a US corporation, purchased goods on credit from a British company on April 8, 2007. ABC made a payment of 10,000FC on May 8, 2007. The exchange rate was $1= FC .50 on April 8 and $1= FC .60 on May 8. What amount of foreign exchange gain or loss should be recognized on May 8 ?arrow_forwardBento Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2020, for 100,000 crowns. It paid the foreign currency account payable on January 15, 2021. The following exchange rates are relevant: Date U.S. Dollar per Crown November 1, 2020 $ 0.754 December 31, 2020 $ 0.742 January 15, 2021 $ 0.747 How does the fluctuation in the U.S. dollar per crown exchange rate affect Bento’s 2020 income statement? How does the fluctuation in the U.S. dollar per crown exchange rate affect Bento’s 2021 income statement?arrow_forward
- McCarthy, Inc.’s Brazilian subsidiary borrowed 100,000 euros on January 1, 2017. Exchange rates between the Brazilian real (BRL) and euro (€) and between the U.S. dollar ($) and BRL are as follows: BRL (per euro€) US $ Per BRL January 1, 2017 BRL 4.2 $0.28 Average, 2017 BRL 4.3 $0.25 December 31, 2017 BRL 4.6 $0.20 At what amount should the Brazilian subsidiary’s euro note payable be reported on McCarthy’s December 31, 2017, consolidated balance sheet? Choose the correct.a. $84,000.b. $86,000.c. $92,000.d. $128,800.arrow_forwardCharin Corporation, a U.S. corporation, imports and exports small electronics. On December 1, 2014, Charin purchased components from an Egyptian manufacturer amounting to 500,000 Egyptian pounds. The purchase is payable in Egyptian pounds. At December 30, Charin wanted to take advantage of favorable exchange rates but did not have the full amount required to pay off the entire amount. Charin wired the funds to pay off half of the balance owed and expected to pay the remaining balance on January 3, 2015. Charin paid the remaining balance on January 3, 2015. The respective exchange rates were as follows:December 1, 2014 1 pound = $.170December 30, 2014 1 pound = $.165December 31, 2014 1 pound = $.175January 3, 2015 1 pound = $.180 Document the journal entries related to these transactions for the four dates shown. If no entry is required, record "no entry."arrow_forwardMcCarthy, Inc.’s Brazilian subsidiary borrowed 100,000 euros on January 1, 2017. Exchange rates between the Brazilian real (BRL) and euro (€) and between the U.S. dollar ($) and BRL are as follows: BRL (per euro€) US $ Per BRL January 1, 2017 BRL 4.2 $0.28 Average, 2017 BRL 4.3 $0.25 December 31, 2017 BRL 4.6 $0.20 What amount of foreign exchange gain or loss should be reflected in McCarthy’s 2017 consolidated net income?a. $8,000 loss.b. $10,000 loss.c. $2,000 gain.d. $5,000 gain.arrow_forward
- Valley Harps Ltd, a Trinidad & Tobago based company, annually negotiates a contract with SwissWatch Company, located in Switzerland, to purchase a large shipment of watches. On July 17, 2015,Valley Harps Ltd purchased 10,000 watches for a total of 1.25 million Swiss francs. However, ValleyHarps Ltd is not aware of the exchange rates for Swiss francs, but those of other currencies, includingthe US dollar.Selected exchange rates are given as follows:July 17, 2015 25, 2020TTD 6.55/USD TTD 6.75/USDUSD 0.73/CHF USD 0.77/CHF You are asked to assist Valley Harps Ltd in determining the following:a) The total cost and cost per watch in Trinidad & Tobago dollars. b) The total cost and cost per watch in Trinidad & Tobago dollars of 12,000 watches purchased onJuly 25, 2020, assuming that Switch Watch Company maintained the same price per watch (inSwiss francs).arrow_forwardLocal Corp imported a heavy machine from the US for US$50,000 on October 10, 2019. A letter of credit was opened with a Makati branch based on the commercial invoice for US$50,000, on which Local Corpl made a 100% deposit cover based on the exchange rate of $1.00 to P27.50. Shipment of the heavy machine was effected on December 30, 2019, at which time the exporter collected the proceeds of the letter of credit when the prevailing exchange rate was $1.00 to P28.00. From the exchange rate fluctuation, Local Corp realized: Group of answer choices A. P25,000 gain B.P25,000 loss C. P5,000 gain D. No gain, No lossarrow_forwardAt the end of 2020, an Italian subsidiary of a U.S. parent reports €1,000,000 in equipment purchased when the exchange rate was $1.40, and €3,000,000 in equipment purchased when the exchange rate was $1.50. The average exchange rate for 2020 is $1.35, and the beginning and ending rates for 2020 are $1.42 and $1.31, respectively. If the Italian subsidiary’s functional currency is the U.S. dollar, the equipment account, in U.S. dollars, is a. $5,240,000 b. $5,350,000 c. $5,400,000 d. $5,900,000arrow_forward
- North Bank has been borrowing in the U.S. markets and lending abroad, thus incurring foreign exchange risk. In a recent transaction, it issued a one-year $2 million CD at 6 percent and funded a loan in euros at 8 percent. The spot rate for the euro was €1.45/$ at the time of the transaction (US being the home country). a. Information received immediately after the transaction closing indicated that the euro will depreciate to €1.47/$ by year-end. If the information is correct, what will be the realized spread on the loan? What should have been the bank interest rate on the loan to maintain the 2 percent spread? Assume adjustments in principal value are included in the spread. b. The bank had an opportunity to sell one-year forward marks at €1.46. What would have been the spread on the loan if the bank had hedged forward its foreign exchange exposure? c. What is interest rate parity theory and calculate that at what forward exchange rate of dollars per euro, an investor in USA would…arrow_forward4) Brief, Inc., had a receivable from a foreign customer that is payable in the customer’s local currency. On December 31, 2020, Brief correctly included this receivable for 200,000 local currency units (LCU) in its balance sheet at $110,000. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $120,000. In Brief’s 2021 consolidated income statement, how much should it report as a foreign exchange gain? a) $–0– b)$10,000 c) $15,000 d) $25,000arrow_forwardBaltimore, Inc., is a U.S.‑based MNC that obtains 10 percent of its supplies from European manufacturers. Sixty percent of its revenues are due to exports to Europe, where its products are invoiced in euros. Explain how Baltimore can attempt to reduce its economic exposure to exchange rate fluctuations in the euro.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT