ABC limited (An Australian company) imports die-cast parts from its Chinese subsidiary that are usedin the production of children's toys. Per unit, part126 costs the Chinese subsidiary AUD $200 andAUD $20 to ship to ABC limited. ABC limited usespart 126 to produce a toy airplane that it sell tolocal stores for AUD $600 per unit. The followingtax rates apply: Chinese income tax: 25% Australianincome tax: 30% Australian import duty: 10% ofinvoice price Required:a. Calculate the total amount of income taxs andimport duties paid to the Australian and Chinesegovernment if part 126 is sold to ABC limited at theprice of AUD $300 per unitb. Calculate the total amount of income taxs andimport duties paid to the Australian and Chinesegovernment if part 126 is sold to ABC limited at theprice of AUD $400 per unitc. Explain why the results got in part (a) and (b)differ

When Invoice Price of Part 126 is AUD $300 per unit Revenue : 300 Cost : 220 ( 200+20…

a. Calculate the total amount of income taxs and import duties paid to the Australian and Chinese government if part 126 is sold to ABC limited at the price of AUD $300 per unit b. Calculate the total amount of income taxs and import duties paid to the Australian and Chinese government if part 126 is sold to ABC limited at the price of A UD $400 per unit

a. Calculate the total amount of income taxs and import duties paid to the Australian and Chinese government if part 126 is sold to ABC limited at the price of AUD $300 per unit b. Calculate the total amount of income taxs and import duties paid to the Australian and Chinese government if part 126 is sold to ABC limited at the price of A UD $400 per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

ABC limited (An Australian company) imports die-
cast parts from its Chinese subsidiary that are used
in the production of children's toys. Per unit, part
126 costs the Chinese subsidiary AUD $200 and
AUD $20 to ship to ABC limited. ABC limited uses
part 126 to produce a toy airplane that it sell to
local stores for AUD $600 per unit. The following
tax rates apply: Chinese income tax: 25% Australian
income tax: 30% Australian import duty: 10% of
invoice price Required:
a. Calculate the total amount of income taxs and
import duties paid to the Australian and Chinese
government if part 126 is sold to ABC limited at the
price of AUD $300 per unit
b. Calculate the total amount of income taxs and
import duties paid to the Australian and Chinese
government if part 126 is sold to ABC limited at the
price of AUD $400 per unit
c. Explain why the results got in part (a) and (b)
differ

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