Reference no: EM131565639
Q1. Aco Ltd mined diamonds at a cost of FC 1,000,000 and sold them to Beako for FC 2,500,000. Beako distributed the diamonds to its customers and received FC 4,000,000. If the national VAT is 20%, how much tax did Beako pay?
A) FC 200,000
B) FC 500,000
C) FC 300,000
D) FC 800,000
Q2. A U.S. corporation is subject to an income tax rate of 35% and has a branch in the U.K. which paid the national corporate tax rate of 30% on its earnings there. The branch generated taxable income from operations in the U.K. equivalent to $2,000,000. What is the amount of the taxes owed to the U.S. government on the income generated in the U.K.?
A) $600,000
B) $700,000
C) $100,000
D) $0
Q3. Use the following to answer the two questions:
A Japanese branch of a U.S. corporation paid $4,200,000 in taxes to the government of Japan on income it generated there. The corporation is subject to a 35% tax rate in the U.S.
How much foreign tax credit can be taken in calculating the taxes owed to the U.S. on $10,000,000 of Japanese branch income?
A) $4,200,000
B) $3,500,000
C) $0
D) $7,000,000
How much tax will be owed to the U.S. government on the Japanese branch income?
A) $4,200,000
B) $3,500,000
C) $0
D) $7,000,000