Compute trikeco deemed, Compute Trikeco's deemed paid

Compute trikeco deemed

Assignment Help Accounting Basics

Reference no: EM13970886

Trikeco, a domestic corporation, manufactures mountain bicycles for sale both in the United States and Europe. Trikeco operates in Europe through Trike1, a wholly owned Italian corporation that manufactures a special line of mountain bicycles for the European market. In addition, Trike1 owns 100% of Trike2, a U.K. corporation that markets Trike1's products in the United Kingdom. At end of the current year, the undistributed earnings and foreign income taxes of Trike1 and Trike2 are as follows:

Trike1 Trike2

Post-1986 undistributed earnings $180 million $108 million

Post-1986 foreign income taxes $72 million $54 million

During the current year, Trike2 distributed a $20 million dividend to Trike1, and Trike1 distributed a $10 million dividend to Trikeco. To simplify the computations, assume that neither dividend distributions attracted any Italian or U.K. withholding taxes, and that the dividend received by Trike1 was exempt from Italian taxation. Compute Trikeco's deemed paid foreign tax credit, as well as the residual U.S. tax, if any, on the dividend Trikeco received from Trike1. Assume the U.S. tax rate is 35%.

Reference no: EM13970886

Questions Cloud

Consider when making the cash flow estimates : For what reasons would a firm use a financial model in projecting future cash flows from an investment, and what are the primary factors to consider when making the cash flow estimates?

Joint return and claim clark : Clark, a 12-year-old child, lives with his parents. During the current year, Clark earned $2,400 delivering newspapers. This was his only income. Clark's parents file a joint return and claim Clark as a dependent. Considering this information, whi..

What does the american political landscape look like : How do we start answering broad questions? We begin by exploration and investigative deconstruction. Examine the list of research questions formulated by the Pew Research Center in the last 10 years: What does the American political landscape look ..

Discuss somersets global supply chain : Discuss Somersets global supply chain and possible remedies for its supply chain problems, including strategic and tactical changes that might improve the company's supply chain performance, reduce system variability, and improve quality and custo..

Compute trikeco deemed : Compute Trikeco's deemed paid foreign tax credit, as well as the residual U.S. tax, if any, on the dividend Trikeco received from Trike1. Assume the U.S. tax rate is 35%.

How sensitivity analysis affects the evaluation process : Explain the use of IRR and cash multiples as alternative valuation metrics, and discuss the drawbacks of those methods. In your answer, include how sensitivity analysis affects the evaluation process.

Optimal level of leverage from tax-saving perspective : Define EBIT and discuss why the optimal level of leverage from a tax-saving perspective is the level at which interest equals EBIT. Does this have a connection with under-leveraging corporations both domestically and internationally?

Asymmetric information have on the optimal level of leverage : What impact does asymmetric information have on the optimal level of leverage? In your answer, be sure to describe the implications of adverse selection and the lemons principle for equity issuance, as well as the empirical implications.

Compare and contrast mature profitable firms : Compare and contrast mature profitable firms with stable cash flows with firms with higher risk (dependencies on economy) with unstable cash flows. What risks do they take in regards to leverage use, tax shields, and trading information between manag..

User Account

All Pages