Pursco is a domestic corporation that distributes

Reference no: EM13583835

Pursco is a domestic corporation that distributes scientific equipment worldwide. During the current year, Pursco had $100 million of sales, a gross profit of $40 million, and incurred $30 million of selling, general and administrative expenses (SG&A), for taxable income of $10 million. Pursco%u2019s sales include $20 million of sales to foreign customers. The gross profit on these foreign sales was $10 million. Pursco transferred title abroad on all foreign sales, and therefore the entire $10 million is classified as foreign-source income. A time management survey was recently completed, and indicates that employees devote 90% of their time to the company%u2019s domestic operations and 10% to foreign operations. Compensation expenses account for $20 million of the $30 million of total SG&A expenses. Assume Pursco%u2019s $10 million of taxable income is subject to U.S. tax at a 35% rate.

Compute Pursco%u2019s foreign tax credit limitation under the following independent assumptions.

a. Pursco determines the amount of SG&A expenses allocable to foreign-source income using gross sales as an apportionment base.

b. Pursco determines the amount of SG&A expenses allocable to foreign-source income using gross profit as an apportionment base.

c. Pursco determines the amount of SG&A expenses allocable to foreign-source income using time as an apportionment base for the compensation component of SG&A, and gross sales as an apportionment base for the all other SG&A expenses.

Reference no: EM13583835

Questions Cloud

As a sidereaction organometallic reagents can react with : as a side?reaction organometallic reagents can react with atmospheric co2 to produce metal carboxylates while the cacl2

Annual profit in thousands of dollars is given by the : annual profit in thousands of dollars is given by the function px 100vx-5 3000 where x is the number of items sold in

Simulate the standardised sum of independent and : 1. repeatedly 104 times simulate the standardised sum of independent and identically distributed variates x1 . . .

Analyze three accounting standards promulgated by the fasb : analyze three accounting standards promulgated by the fasb and show how economic consequences rather than

Pursco is a domestic corporation that distributes : pursco is a domestic corporation that distributes scientific equipment worldwide. during the current year pursco had

How does lean manufacturing reduces scrap waste and : 1.what is lean accounting?2.what are some advantages and disadvantags3.what are some issuess accountants face when

Would changing the asset definition in the conceptual : would changing the asset definition in the conceptual framework to one concerned with property rights have any other

During the year linh actually used 150000 pounds of : 1. forbes company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to

Engco a domestic corporation produces industrial engines at : engco a domestic corporation produces industrial engines at its u.s. plant for sale in the united states and canada.

User Account

All Pages