The management of Nixon Company must decide between locating a new branch office in foreign Jurisdiction F or foreign Jurisdiction G. Regardless of location, the branch operation will use tangible property (plant and equipment) worth $11.2 million and should generate annual gross receipts of $2.6 million. Jurisdiction F imposes an annual property tax of 4 percent of the value of business property and a 15 percent gross receipts tax. Jurisdiction G imposes no property tax but imposes a 30 percent gross receipts tax. Required: a. Compute the tax costs of operating in both jurisdictions. b. Solely on the basis of these facts, should Nixon locate its new branch in Jurisdiction F or Jurisdiction G?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The management of Nixon Company must decide between locating a new branch office in foreign Jurisdiction F or foreign Jurisdiction
G. Regardless of location, the branch operation will use tangible property (plant and equipment) worth $11.2 million and should
generate annual gross receipts of $2.6 million. Jurisdiction F imposes an annual property tax of 4 percent of the value of business
property and a 15 percent gross receipts tax. Jurisdiction G imposes no property tax but imposes a 30 percent gross receipts tax.
Required:
a. Compute the tax costs of operating in both jurisdictions.
b. Solely on the basis of these facts, should Nixon locate its new branch in Jurisdiction F or Jurisdiction G?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the tax costs of operating in both jurisdictions. (Enter your answers in dollars not in millions of dollars.)
Tax Cost of
Operating
Jurisdiction F
$
8,380,000
Jurisdiction G
$
7,800,000
Required A
Required B >
Transcribed Image Text:The management of Nixon Company must decide between locating a new branch office in foreign Jurisdiction F or foreign Jurisdiction G. Regardless of location, the branch operation will use tangible property (plant and equipment) worth $11.2 million and should generate annual gross receipts of $2.6 million. Jurisdiction F imposes an annual property tax of 4 percent of the value of business property and a 15 percent gross receipts tax. Jurisdiction G imposes no property tax but imposes a 30 percent gross receipts tax. Required: a. Compute the tax costs of operating in both jurisdictions. b. Solely on the basis of these facts, should Nixon locate its new branch in Jurisdiction F or Jurisdiction G? Complete this question by entering your answers in the tabs below. Required A Required B Compute the tax costs of operating in both jurisdictions. (Enter your answers in dollars not in millions of dollars.) Tax Cost of Operating Jurisdiction F $ 8,380,000 Jurisdiction G $ 7,800,000 Required A Required B >
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