Questions from Corporate Finance

Q: In the context of unbundling cash flows from subsidiary to parent,

In the context of unbundling cash flows from subsidiary to parent, explain how each of the following creates a conduit. What are the tax consequences of each? a. Imports of components from the parent....

Q: Subsidiary Alpha in Country Able faces a 40% income tax rate

Subsidiary Alpha in Country Able faces a 40% income tax rate. Subsidiary Beta in Country Baker faces only a 20% income tax rate. At present each subsidiary imports from the other an amount of goods an...

Q: What are the differences between a “license fee” and a

What are the differences between a “license fee” and a “royalty fee”? Do you think license and royalty fees should be covered by the tax rules that regulate transfer pricing? Why?

Q: Should the anticipated internal rate of return (IRR) for a

Should the anticipated internal rate of return (IRR) for a proposed foreign project be compared to (1) alternative home country proposals, (2) returns earned by local companies in the same industry...

Q: What is the difference between a “management fee”, a “

What is the difference between a “management fee”, a “technical assistance fee”, and a “license fee for patent usage”? Should they be treated differently for income tax purposes?

Q: What methods might the U.S. Internal Revenue Service use

What methods might the U.S. Internal Revenue Service use to determine whether allocations of distributed overhead are being fairly allocated to foreign subsidiaries?

Q: Explain the difference between a letter of credit (L/C

Explain the difference between a letter of credit (L/C) and a draft. How are they linked?

Q: What is the major difference between “currency risk” and “

What is the major difference between “currency risk” and “risk of noncompletion”? How are these risks handled in a typical international trade transaction?

Q: Identify each party to a letter of credit (L/C

Identify each party to a letter of credit (L/C), and indicate its responsibility.

Q: Define the following terms: a. Operating exposure

Define the following terms: a. Operating exposure b. Economic exposure c. Competitive exposure