Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Question
Chapter 19, Problem 19.1WUE
Summary Introduction
To determine: The net funds available to the parent corporation (a) if foreign taxes can be applied against the U.S. tax liability and (b) if they cannot.
Expert Solution & Answer
Answer to Problem 19.1WUE
The net funds available to the parent corporation (a) if foreign taxes can be applied against the U.S. tax liability is $31,350 and (b) if they cannot net funds available is $20,691.
Explanation of Solution
Given information:
Subsidiary pretax income: $55,000
Local tax: 40.00%
Dividend withholding tax: 5.00%
US tax rate: 34.00%
Calculation of the SA receipts of dividend:
Excel working:
Therefore, the SA receipt of debt is $31,250.
(a) if foreign taxes can be applied against the U.S. tax liability
Calculation of the net fund available to SA:
Excel working:
Therefore, net fund available to SA is $31,500.
(b) if they cannot.
Foreign taxes cannot be applied against the U.S. tax liability
Excel working:
Therefore, Net fund available to SA is $20,691.00
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Students have asked these similar questions
If a branch of a foreign corporation (resident foreign corporation) derives net income of P20,000,000.00 to be remitted to the foreign head office, how much is the branch profits remittance tax?
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Chapter 19 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 19.1 - Prob. 19.1RQCh. 19.1 - Prob. 19.2RQCh. 19.1 - Prob. 19.3RQCh. 19.1 - Prob. 19.4RQCh. 19.2 - Under FASB No. 52, what are the translation rules...Ch. 19.3 - Prob. 19.6RQCh. 19.3 - Explain how differing inflation rates between two...Ch. 19.3 - Discuss macro and micro political risk. What is...Ch. 19.4 - Prob. 19.9RQCh. 19.4 - Prob. 19.10RQ
Ch. 19.4 - Prob. 19.11RQCh. 19.4 - Prob. 19.12RQCh. 19.5 - Prob. 19.13RQCh. 19.5 - Prob. 19.14RQCh. 19.5 - Prob. 19.15RQCh. 19.6 - Prob. 19.16RQCh. 19 - Prob. 19.1WUECh. 19 - Prob. 19.2WUECh. 19 - Prob. 19.3WUECh. 19 - Prob. 19.4WUECh. 19 - Prob. 19.5WUECh. 19 - Prob. 19.1PCh. 19 - Prob. 19.2PCh. 19 - Prob. 19.3PCh. 19 - ETHICS PROBLEM Is there a conflict between...
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