Advanced Accounting
Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 8, Problem 38P

(a)

To determine

Apply corporation T’s materiality tests to identify the countries to report separately with respect to

(a) Revenues

(b)

To determine

Apply corporation T’s materiality tests to identify the countries to report separately with respect to

(b) Long lived assets

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Engco, a U.S. corporation, produces industrial engines at its U.S. plant for sale in the United States and Canada. During the current year, Engco's total sales to Canadian customers are $10 million and the related cost of goods sold is $7 million. Title passes in Canada on all engine sales to Canadian customersa. How much of Engco's export gross profit of $3 million (export sales of $10 million less$7 million cost of goods sold) is classified as foreign-source tor U.S. tax purposes?b. Now assume that the facts are the same as in part (a), except that EngCo is a distributor that purchases the ensines trom indevendent third parties tor sale to customers in both the United States and Canada. How much of Engco's export gross profit of $3 million from Canadian sales is classitied as foreign-source tor U.S. tax purposes?
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Advanced Accounting

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