C12-Chp-09-1C-Class-Illustration-International

C12-Chp-09-1C-Class-Illustration-International -...

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ceb390e0ad92f10c48e9e550e53a195d4a15e327.xlsx Page 1 of 1 1 Text Citation 2 Amounts in Millions of Dollars "Parent" Investee Corporations 3 Assume U.S. tax rate is 40% Charlotte Hickory Salisbury Hong Kong 4 Assume Hong Kong tax rate is 40% Ownership level 5 First year of operation for all corporations. Investor 100% 30% 100% 6 Operating Revenue $100 $100 $100 $200 7 Operating Expenses ($40) ($40) ($40) ($100) 8 Net income before income taxes (Note A) $60 $60 $60 $100 9 Hong Kong taxes (40%) ($40) 10 Net income after foreign taxes $60 $60 $60 $60 11 Dividend paid by investee $20 $30 $30 12 Dividends received by Charlotte $20 $9 $30 13 GAAP Consol-1120 14 Parent income $60 $60 15 Hickory net income $60 $60 16 Salisbury (see discussion of equity method-text) $18 $9 14-3 17 U.S. Income $138 18 Foreign income - Hong Kong $100 $30 9-21 19 Gross up of Hong Kong Taxes (See Pg. 9-28, Example 26) $20 9-28 78 20 Net Incomebefore income tax, Taxable Income
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