Resort Hotel Corporation, a U.S. firm, establishes a wholly owned subsidiary in Singapore. As a parent corporation, with respect to the subsidiary, Resort retains complete ownership of all of the facilities in Singapore. more than half, but less than all, of the facilities in Singapore. none of the facilities in Singapore. no more than half of the facilities in Singapore
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- Windmill Corporation manufactures products in its plants in Iowa, Canada, Ireland, and Australia. Windmill conducts its operations in Canada through a 50 percent-owned joint venture, CanCo. CanCo is treated as a corporation for U.S. and Canadian tax purposes. An unrelated Canadian investor owns the remaining 50 percent. Windmill conducts its operations in Ireland through a wholly owned subsidiary, IrishCo. IrishCo is a controlled foreign corporation for U.S. tax purposes. Windmill conducts its operations in Australia through a wholly owned hybrid entity, KiwiCo. KiwiCo is treated as a branch for U.S. tax purposes and a corporation for Australian tax urposes. Windmill also owns a 5 percent interest in a Dutch corporation, TulipCo. During 2021, Windmill reported the following foreign source income from its international operations and investments.(See image attached) Classify the income received by Windmill into the appropriate FTC baskets.Hughes Inc. has a wholly owned subsidiary in Canada that previously had been determined as having the Canadian dollar as its functional currency. Due to a recent restructuring, Hughes Inc.'s CFO believes that the functional currency of the Canadian company has changed to the U.S. dollar. A large cumulative translation adjustment related to the Canadian subsidiary is included in accumulated other comprehensive income on Hughes Inc.'s balance sheet. The CFO is unsure whether the cumulative translation adjustment should be removed from equity, and if so, to what other account it should be transferred. He also questions whether the change in functional currency qualifies as a change in accounting principle, which would require retrospective application of the temporal method in translating the Canadian subsidiary's financial statements. He wonders, for example, whether the Canadian subsidiary's nonmonetary assets need to be restated as if the temporal in applied in previous years.…United States Tool Corp., a U.S. corporation, sells all of the stock of its wholly owned German Subsidiary, Modern Tool A.G., to an unrelated German corporation for $50 million cash, which produces a gain of $40 million. All negotiations occur and the sale contract is executed in Germany. Title to the stock passes to the purchaser in Germany, and the purchase price is paid in Germany. Modern Tool A.G. has been actively engaged in business in Germany and France for the last 10 years and has received approximately 60 percent of its gross income from France and 40 percent from Germany each year. Is the gain foreign-source income?
- ABC Corp, a public limited company, operates in the energy and power sector. The companyhas experienced significant growth in recent years and has expanded its operationinternationally by the acquisition of overseas subsidiaries. Group policy is to translate thefinancial statements of these subsidiaries using the closing rate method with goodwillcalculated at the rate of exchange ruling at the date of acquisition.One of these subsidiaries, XYZ, is incorporated in a country that is suffering from a very highinflation (120% over the last 3 years) as a result of political and economic problems.Additionally, it is difficult to repatriate funds from the country. ABC Corp owned 91% of theshares of XYZ, with the foreign government owning the balance. Most of the productsproduced by XYZ are sold locally, but approximately 10 % of the product sold at cost to ABC.Because of a dispute XYZ has created a provision for doubtful debt against an intercompanyamount owing from ABC. As a part of its risk…A U.S. company owns an 80% interest in a company located on Mars. Martian currency is called the Martian Credit. During the year the parent company sold inventory that had cost $24,000 to the subsidiary on account for $30,800 when the exchange rate was $0.5192. The subsidiary still held one-half of the inventory and had not paid the parent company for the purchase at the end of the fiscal period. The unsettled account is denominated in dollars. The exchange rate at the fiscal year-end was $0.4994. Assuming that the transaction had been denominated in 47,004 Martian Credits rather than dollars, compute the transaction gain or loss that would be reported by the parent company.A U.S. company owns an 80% interest in a company located on Mars. Martian currency is called the Martian Credit. During the year the parent company sold inventory that had cost $24,400 to the subsidiary on account for $30,000 when the exchange rate was $0.5192. The subsidiary still held one-half of the inventory and had not paid the parent company for the purchase at the end of the fiscal period. The unsettled account is denominated in dollars. The exchange rate at the fiscal year-end was $0.4994. (a1) Compute the amounts that would be reported for the inventory and accounts payable in the subsidiary's translated balance sheet. The entity's functional currency is the Martian Credit. (Round answers to O decimal places, e.g. 5.125.) Inventory Accounts Payable $ $
- Shares are not deemed property within the Philippines when a. The shares are issued by a domestic corporation. b. The shares are issued by a foreign corporation with no business situs in the Philippines. c. The shares are issued by a foreign corporation with 85% business in the Philippines. d. The shares are issued by a corporation organized under Philippine laws.Comet operates solely within the United States. It owns two subsidiaries conducting business in the United States and several foreign countries. Both subsidiaries are U.S. corporations. This year, the three corporations report the following: Comet Sub 1 Sub 2 Foreign Source Income 0 $ 3,660,000 4,800,000 U.S. Source Foreign Income Income Tax Paid 0 $ 772,500 172,000 442,500 Required: a. If Comet and its two subsidiaries file a consolidated U.S. tax return, compute consolidated income tax. b. What is the aggregate tax of the group if the three corporations file separate U.S. tax returns? Required A Required B $ 380,000 1,250,000 Complete this question by entering your answers in the tabs below. Consolidated income tax If Comet and its two subsidiaries file a consolidated U.S. tax return, compute consolidated income tax. Note: Do not round any intermediate division.Bintang Seri, an Indonesian company has a Malaysian subsidiary that earned MYR30 million this year. Sari Bulan, which is also resided in Indonesia has a Malaysian subsidiary that earned MYR20 million this year. The subsidiary of Bintang Seri plans to reinvest its earnings in Malaysia while the subsidiary of Sari Bulan plans to remit its earnings to the Indonesian parent. Another Indonesian company, Milando does not have a Malaysian subsidiary but it received revenue of MYR 40 million this year from exporting to Malaysia. All three companies have the same total revenue and total earnings levels (when considering their Indonesian business as well), and are the same size, and do not have any other international business. Which company is subject to the highest degree of translation exposure? Justify your answer with thorough explanation on all companies.
- Tenco. a U.S. corporation. manutactures tennis rackets tor sale in the United States and abroad. Tenco owns 100% of the stock of Teny. a foreign sales subsidiary that was organized in Year 1. During Year 1. Ten had $15 million of foreign base company sales income, paid $1 million in foreign income taxes and distributed no dividends During Year 2, Teny had no earnings and profits, paid no foreign income taxes and distributed a $14 million dividend. Assuming the U.S. cornorate tax rate is 21%. what are the U.S. tax consequences of Teny's Year1 and Year 2 activities?*ABC Corporation is a manufacturing company that recently acquired a subsidiary in a foreign country. The subsidiary's functional currency is different from the parent company's reporting currency. ABC Corporation prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Which of the following statements regarding the translation of the subsidiary's financial statements and the consolidation process is correct? A) When translating the subsidiary's financial statements from its functional currency to the parent company's reporting currency, historical exchange rates are used for all balance sheet items. B) Under IFRS, if the functional currency of the subsidiary is different from the reporting currency of the parent company, the subsidiary's financial statements must be remeasured using the reporting currency before consolidation. C) If the subsidiary's functional currency is the same as the parent company's reporting…Comet operates solely within the United States. It owns two subsidiaries conducting business in the United States and several foreign countries. Both subsidiaries are U.S. corporations. This year, the three corporations report the following: Comet Sub 1 Sub 2 Foreign Source Income 0 $ 3,500,000 4,700,000 U.S. Source Foreign Income Tax Paid 0 Required A Required B Income $ 600,000 150,000 410,000 Required: a. If Comet and its two subsidiaries file a consolidated U.S. tax return, compute consolidated income tax. b. What is the aggregate tax of the group if the three corporations file separate U.S. tax returns? $ 350,000 1,175,000 Complete this question by entering your answers in the tabs below. Consolidated income tax If Comet and its two subsidiaries file a consolidated U.S. tax return, compute consolidated income tax. Note: Do not round any intermediate calculations.