Lefty Inc. sells its products to customers residing in Country X and Country Y. Both foreign jurisdictions have a 20 percent corporate income tax. This year, Lefty made more than $30 million of sales in both Country X and Country Y. However, it paid income tax only to Country X. What factors could account for this result?

Lefty Inc. sells its products to customers residing in Country X and Country Y. Both foreign jurisdictions have a 20 percent corporate income tax. This year, Lefty made more than $30 million of sales in both Country X and Country Y. However, it paid income tax only to Country X. What factors could account for this result?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Skane Shipping Ltd. (SSL) operates a fleet of container ships in international trade between Sweden and Singapore. All of the shipping income (that is, that related to SSL's ships) is deemed to be earned in Sweden. SSL also owns a dock facility in Singapore that services SSL's fleet. Income from the dock facility is deemed to be earned in Singapore. SSL's income deemed attributable to Sweden is taxed at a 75 percent rate. Its income attributable to Singapore is taxed at a 25 percent rate. Last year, the dock facility had operating revenues of $11 million, excluding services performed for SSL's ships. SSL's shipping revenues for last year were $84 million. Operating costs of the dock facility totaled $14 million last year and operating costs for the shipping operation, before deduction of dock facility costs, totaled $50 million. No similar dock facilities in Singapore are available to SSL. However, a facility in Malaysia would have charged SSL an estimated $8 million for the services…
Waco Leather Incorporated, a U.S. corporation, reported total taxable income of $5 million. Taxable income included $1.5 million of foreign source taxable income from the company's branch operations in Mexico. All of the branch income is foreign branch income. Waco paid Mexican income taxes of $300,000 on its branch income. Compute Waco's allowable foreign tax credit. Note: Enter your answer in dollars and not in millions of dollars. Foreign tax credit
Which of the following statements concerning income taxes in Canada is not true? a) Income taxes must often be estimated based on prior years tax returns. b) Income taxes are usually paid through instalment payments throughout the year. c) The deadline for filing a corporate tax return and payment of any outstanding. Taxes is 6 months after the company’s year-end. d) Multinational companies located in Canada may be required to pay tax in Canada.
Enterprise X manufactures pianos in Malaysia. Enterprise Y distributes these from Hong Kong. Both X and Y are 100% owned by Enterprise Z. When selling pianos on the market, Z has no control on the price at which one piano is sold. Reason is that prices are set by supply and demand. Currently, the market price for one piano is USD 5,000. However, Z does control all transactions between X and Y. X is taxed in Malaysia and Y is taxed in Hong Kong. The corporate tax rate in Hong Kong is 16.5%. In Malaysia, it is 25%. The direct / indirect costs of manufacturing one piano are USD 1,000. Consider two scenarios. Scenario 1: The price X charges Y, for the supply of one piano, is similar to the market price USD 4,000. Scenario 2: X charges Y a non-market price of USD 2,000. Explain meaning of associated enterprises What is a controlled transaction? Explain the concept of transfer price using the example
Parent Corporation is located in a country with an income tax rate of 40%. Subsidiary Company located in a country with an income tax rate of 25%. The best tax strategy for the enterprise would be to set the transfer prices on sales of goods from the subsidiary to the parent at a price that is a. higher than the price that would be in effect for unrelated parties in an arms length transaction. b. lower than the price that would be in effect for unrelated parties in an arms length transaction. c. equal to the price that would be in effect for unrelated parties in an arms length transaction. d. transfer prices do not affect overall tax paid.
Brandy, a U.S. corporation, operates a manufacturing branch in Chad, which does not have an income tax treaty with the United States. Brandy’s world- wide Federal taxable income is $30,000,000; it is subject to a 21% marginal tax rate. Profits and taxes in Chad for the current year are summarized as follows. Compute Brandy’s foreign tax credit associated with its operations in Chad.
The following information relates to Swans Ltd, a vendor, and a resident of the Republic, for its tax period (a two-month period) ended 31 December 2022: Supplies of goods made by it subject to value-added tax at the standard rate amounted to R345 000 (R300 000 plus value-added tax of R45 000). Supplies of goods or services made by it subject to value-added tax at the zero-rate amounted to R100 000 (R100 000 plus value-added tax of Rnil). These goods were exported. Supplies of goods or services made by it not subject to value-added tax (exempt) amounted to R30 000 (R30 000 plus value-added tax of Rnil). Input tax of R50 000 was incurred by it for capital goods purchased. Input tax incurred for goods and services supplied to it was R25 000. Second-hand goods (not of a capital nature) were purchased by it from a non-vendor for R23 000 and paid for in cash. A debtor who owed it R69 000 (R60 000 plus value-added tax of R9 000) was liquidated during this period. A first and final…
Oracle Corp, a U.S. corporation, earns $25 million of taxable income from U.S. sources and $10 million of taxable income from foreign sources. What amount of taxable income does Oracle report on its U.S. tax return? a. $25 million. b. $35 million. c. $25 million less any tax paid on the foreign income. d. $35 million less any tax paid on U.S. income.
Castor & Pollux Limited is an Australian firm whose shares trade on the ASX. The firm earn part of its domestically income in Australia and and part of its income overseas, where it is required to pay tax to the foreign governments where it operates. Currently, the Australian corporate tax rate is 25% and the Medicare levy is 2%. Castor & Pollux provides dividend imputation to Australian-resident shareholders from its Australian tax paid. Assume that Castor & Pollux pays a 85 % partly-franked dividend of $14.32 thousand to an Australian shareholder who currently has a taxable income of $250 thousand before dividends and a marginal tax rate of 32.5% and is NOT exempted from paying Medicare levy. Compute the franking credits this investor would receive from the partly-franked dividend received. O a. $4057.33 O b. $2148.00 c. $3109.83 d. $84197.24 e. $83779.87 O f. $2282.85 g. $1915.30
Stevenson and brothers Ltd is an Australian corporation (tax resident) with a turnover of less than $40 million. It received $900,000 in assessable revenue, $500,000 in allowable deductions, and $100,000 in non-assessable non-exempt income during the current tax year. Interest revenue accounted for $600,000 of their assessable income. It also has $40,000 in tax offests available. Calculate the Taxable income and their Net tax payable (refundable) show all workings, label all relevant figures, state all relevant analysis
Kashi Corporation is the U.S. distributor of fencing (sword fighting) equipment imported from Europe. It is incorporated in Virginia and headquartered in Arlington, Virginia; it ships goods to all 50 states. Kashi's employees attend regional and national fencing competitions, where they maintain temporary booths to market their goods. Determine whether Kashi has income tax nexus and a filing requirement in the following situations: Required: Kashi is incorporated and headquartered in Virginia. It also has property, employees, salespeople, and intangibles in Virginia. Determine whether Kashi has income tax nexus in Virginia. Kashi has employees who live in Washington, D.C., and Maryland, but they perform all their employment-related activities in Virginia. Does Kashi have income tax nexus in Washington, D.C., and Maryland? Kashi has two customers in North Dakota. It receives their orders over the phone and ships goods to them using FedEx. Determine whether Kashi has income tax nexus…
Ranger Company located business in two jurisdications, Singapore and Malaysia. In both countries, the entity has the legal right to offset the taxes receivable and payable. The following information related to deferred taxe assets and liabilities: Classification Amount Taxing jurisdiction Deferred tax asset 800,000 Singapore Deferred tax liability 300,000 Malaysia Deefrred tax liability 600,000 Singapore Required: How should the entity present deferred taxes at year- end? Defferd tax asset Deferred tax liability a. 800,000 900,000 b. 0 1,000,000 c. 200,000 600,000 d. 200,000 300,000