Calculate the profits of Chinglish Dirk and Torrington Edge, and the consolidated results of both, if the markup at Chinglish was increased to 20% and the markup at Tornington was reduced to 10% in the following table: (Round to the nearest British pound)

Calculate the profits of Chinglish Dirk and Torrington Edge, and the consolidated results of both, if the markup at Chinglish was increased to 20% and the markup at Tornington was reduced to 10% in the following table: (Round to the nearest British pound)

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter16: Multijurisdictional Taxation

Section: Chapter Questions

Problem 42P

See similar textbooks

Similar questions

A domestic manufacturing company made the following sales to various entities during the current period as follows:Gross sales to ABC Company, a resident domestic company, P600,000 Gross sales to DEF Company, an export-oriented domestic company, P700,000Gross sales to GHI Enterprises, a non-resident foreign company, US$15,000Gross sales to JKL Corporation, an export-oriented domestic company, P500,000Gross sales to MNO Company, a non-resident foreign company, US$13,000The exchange rate at the time of sale was US$1 = P40The export sale of DEF Company is 65% of its total annual production during the periodGHI Enterprises paid in foreign currency and the transaction was properly accounted in accordance with BSP rules and regulationsThe export sale of JKL Corp is 80% of its total annual production during the period.MNO Company paid in equivalent Philippine peso What amount is subject to 12% VAT and 0%? What is the amount of output VAT for the period?
4. Nagy Corporation’s International Division consists of two of Nagy’s subsidiaries. One of the subsidiaries operates in the United Kingdom and the other on the European continent. The U.K. subsidiary had identical sales revenue amounts, as measured in British pounds, in 20X1 and 20X2 and reported a 25% gross profit margin in both years. Similarly, the European subsidiary’s sales revenue was the same in 20X1 and 20X2 when measured in euros. It reported a 33.33% gross profit margin in both years. Both subsidiaries account for their inventories under FIFO. Assume the British pound was rising steadily in value versus the U.S. dollar throughout 20X1 and 20X2. Assume the euro was declining steadily in value versus the U.S. dollar throughout 20X1 and 20X2. Required: 1. If Nagy uses the current rate method to translate the British subsidiary’s financial statements into U.S. dollars, how is the British subsidiary’s 20X2 gross margin percentage, based on its U.S. dollar financial…
Spartan Corporation manufactures quidgets at its plant in Sparta, Michigan. Spartan sells its quidgets to customers in the United States, Canada, England, and Australia. Spartan markets its products in Canada and England through branches in Toronto and London, respectively. Spartan reported total gross income on U.S. sales of $35,100,000 and total gross income on Canadian and U.K. sales of $7,800,000, split equally between the two countries. Spartan paid Canadian income taxes of $936,000 on its branch profits in Canada and U.K. income taxes of $1,092,000 on its branch profits in the United Kingdom. Spartan financed its Canadian operations through a $9 million capital contribution, which Spartan financed through a loan from Bank of America. During the current year, Spartan paid $540,000 in interest on the loan. Spartan sells its quidgets to Australian customers through its wholly owned Australian subsidiary. Spartan reported gross income of $2,240,000 on sales to its subsidiary during…
Spartan Corporation manufactures quidgets at its plant in Sparta, Michigan. Spartan sells its quidgets to customers in the United States, Canada, England, and Australia. Spartan markets its products in Canada and England through branches in Toronto and London, respectively. Spartan reported total gross income on U.S. sales of $35,100,000 and total gross income on Canadian and U.K. sales of $7,800,000, split equally between the two countries. Spartan paid Canadian income taxes of $936,000 on its branch profits in Canada and U.K. income taxes of $1,092,000 on its branch profits in the United Kingdom. Spartan financed its Canadian operations through a $9 million capital contribution, which Spartan financed through a loan from Bank of America. During the current year, Spartan paid $540,000 in interest on the loan. Spartan sells its quidgets to Australian customers through its wholly owned Australian subsidiary. Spartan reported gross income of $2,240,000 on sales to its subsidiary during…
Livingston Company is a wholly-owned subsidiary of Rose Corporation. Livingston operates in a foreign country with financial statements recorded in pounds (P), the company's functional currency. Financial statements for the year 2024 are as follows: Sales Income Statement For Year Ending December 31, 2024 Cost of goods sold Gross profit Less: Operating expenses Gain on sale of equipment Net income Statement of Retained Earnings P 270,000 (155,000) 115,000 (54,000) 10,000 P 71,000 For Year Ending December 31, 2024 Retained earnings, 1/1/24 Net income Less: Dividends Retained earnings, 12/31/24 P 216,000 71,000 (26,000) P 261,000 Balance Sheet December 31, 2024 Assets Cash Receivables Inventory Property, plant, and equipment (net) Total assets Liabilities and Equities Liabilities Common stock Retained earnings, 12/31/24 Total liabilities and equities Additional Information P 44,000 116,000 58,000 339,000 P 557,000 P 176,000 120,000 261,000 P 557,000 • The common stock was issued in 2017…
Whitehill Chemicals has two operating divisions. Its Formulation Division in the United States mixes, processes, and tests basic chemicals, and then ships them to Ireland, where the company's Commercial Division uses the chemicals to produce and sell various products. Operating expenses amount to $26.7 million in the U.S. and $78.7 million in Ireland exclusive of the costs of any goods transferred from the U.S. Revenues in Ireland are $202 million. If the chemicals were purchased from one of the company's Irish mixing divisions, the costs would be $39.7 million. However, if it had been purchased from an independent U.S. supplier, the cost would be $52.7 million. The marginal income tax rate is 20 percent in the U.S. and 12 percent in Ireland. Required: What is the company's total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios ($39.7 million and $52.7 million)? Note: Enter your answers in dollars and not in millions of dollars. Total tax…
A U.S. multinational corporation has divided its operations into several operating segments and has provided the following data for each segment:(attached)It is important to note that all purchases of goods or services from other segments have been sold to outside parties except one. Control devices with a cost of $1,000,000 were sold to the Semiconductors segment for $1,700,000. These items remain in inventory at year-end.(attached)1. Determine which segments are reportable. 2. Given the available information, prepare all of the necessary schedules and disclosures regarding the entity’s segments, geographical areas, and reconciliations to consolidated amounts. 3. Identify and determine the value of several ratios that may be helpful in analyzing the above information.
Whitehill Chemicals has two operating divisions. Its Formulation Division in the United States mixes, processes, and tests basic chemicals, and then ships them to Ireland, where the company's Commercial Division uses the chemicals to produce and sell various products. Operating expenses amount to $27.2 million in the U.S. and $79.2 million in Ireland exclusive of the costs of any goods transferred from the U.S. Revenues in Ireland are $207 million. If the chemicals were purchased from one of the company's Irish mixing divisions, the costs would be $40.2 million. However, if it had been purchased from an independent U.S. supplier, the cost would be $53.2 million. The marginal income tax rate is 20 percent in the U.S. and 12 percent in Ireland. Required: What is the company's total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios ($40.2 million and $53.2 million)? Note: Enter your answers in dollars and not in millions of dollars. Total tax…
Dianthus Ltd is a multinational company with headquarters in Queensland, Australia. It is, however, listed on both ASX (Australian Securities Exchange) and TWSE (Taiwan Stock Exchange). It manufactures and sells cardboard boxes worldwide. Most of its products are manufactured in Taiwan, where it obtains local materials and labour. Its sales are invoiced in Australian dollars. Some other information about the company is displayed below. Sales breakdown by geographical segments 2020 2019 Sales in Australia 2.1 billion AUD 2.2 billion AUD Sales in Taiwan 2.51 billion TWD 2.04 billion TWD Sales to the rest of the world 0.5 billion AUD 0.4 billion AUD Value of listings on securities / stock exchanges ASX TWSE Number of shares 1,000,000 2,000,000,000 Price per share 510 AUD 2.4 TWD The company issues all of its bonds to both retail and institutional investors in Australia, currently worth AUD 215 million in the market. In the tables above, AUD refers to Australian dollars, whereas TWD refers…
Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…
Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…
Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to the tax incentives offered by the Malaysian Government on manufacturing of promoted products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted products. The choice is between setting up a branch or subsidiary for its Malaysian operation. Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes by, Newco will expand its operation if necessary. However, Newco is still undecided on the timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco financial year end is 31st December. Estimated gross income is approximately RM 1 Million per year.After 5 years of operation, if everything goes according to plan, Newco plan to expand its manufacturing business by incurring more capital expenditure i.e buying more…