Deck 20: Domestic and International Business Expansion

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Question
In the Canada-U.S.tax treaty, the definition of a 'permanent establishment' does not include

A)a place of management.
B)a factory.
C)a storage facility.
D)an office.
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Question
If the expansion is done through direct sales, what is the tax for the Saskatchewan operation?

A)$0
B)$2,750
C)$3,000
D)$5,750
Question
If the expansion is done through a branch location in a permanent establishment run by personnel from Saskatchewan, which of the following is incorrect?

A)The profits belong to the Nova Scotia corporation.
B)The Saskatchewan tax rate will apply.
C)The branch profits for tax purposes may potentially be more than actually earned at the branch.
D)The actual branch profits will be taxed as a separate entity.
Question
Which of the following statements is true concerning domestic expansion of a business?

A)Cash funding requirements will be lower to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses.
B)Cash funding requirements will be higher to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses.
C)Obligations of a new division will have no impact on the founding corporation.
D)The main advantage of incorporating an expansion activity is the use of start-up losses from the new corporation against income from the founding corporation.
Question
Shippers Co.is considering an expansion into the United States.Kellie Sharma, the CEO, is not sure whether to structure this new venture as a branch or subsidiary, and would like some general information before meeting with the accountant and lawyer.(Kellie does not want to use the direct sales method.)
Required:
List two advantages and disadvantages for an expansion using a branch.
A.List two advantages and disadvantages for an expansion using a subsidiary.
Question
Boulder Ltd.is a Canadian corporation which plans to expand internationally.The company has decided to establish a wholly-owned foreign subsidiary corporation in another country.Which of the following statements is incorrect?

A)The subsidiary will be subject to taxes in the foreign country.
B)The subsidiary's profits will be included in the Canadian corporation's worldwide income.
C)Dividends received by the Canadian corporation from the foreign subsidiary are excluded from the Canadian corporation's taxable income.
D)Dividends received by the Canadian corporation from the foreign subsidiary are most often subject to a withholding tax in the foreign jurisdiction.
Question
If the expansion is done through a separate subsidiary, what is the tax for the Saskatchewan operation?

A)$0
B)$2,750
C)$3,000
D)$5,750
Question
The Running Shoe Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a branch in a foreign country.Which of the following is false?

A)The profits of the branch will be subject to income tax in the foreign country.
B)The branch profits will be included in the Canadian corporation's worldwide income.
C)A foreign tax credit can reduce the Canadian taxes payable.
D)If the foreign country has a lower tax rate, a tax benefit will be recognized.
Question
Which of the following lists are acceptable methods for adopting a reasonable transfer price between a Canadian parent and its foreign subsidiary corporations?

A)Comparable arm's-length selling price method; cost-plus method; resale price method
B)Cost-plus method; resale price method; profit-margin method
C)Lowest tax rate method; resale price method; comparable arm's-length selling price method
D)Comparable arm's-length selling price method; lowest tax rate method; profit-margin method
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Deck 20: Domestic and International Business Expansion
1
In the Canada-U.S.tax treaty, the definition of a 'permanent establishment' does not include

A)a place of management.
B)a factory.
C)a storage facility.
D)an office.
C
2
If the expansion is done through direct sales, what is the tax for the Saskatchewan operation?

A)$0
B)$2,750
C)$3,000
D)$5,750
C
3
If the expansion is done through a branch location in a permanent establishment run by personnel from Saskatchewan, which of the following is incorrect?

A)The profits belong to the Nova Scotia corporation.
B)The Saskatchewan tax rate will apply.
C)The branch profits for tax purposes may potentially be more than actually earned at the branch.
D)The actual branch profits will be taxed as a separate entity.
D
4
Which of the following statements is true concerning domestic expansion of a business?

A)Cash funding requirements will be lower to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses.
B)Cash funding requirements will be higher to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses.
C)Obligations of a new division will have no impact on the founding corporation.
D)The main advantage of incorporating an expansion activity is the use of start-up losses from the new corporation against income from the founding corporation.
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5
Shippers Co.is considering an expansion into the United States.Kellie Sharma, the CEO, is not sure whether to structure this new venture as a branch or subsidiary, and would like some general information before meeting with the accountant and lawyer.(Kellie does not want to use the direct sales method.)
Required:
List two advantages and disadvantages for an expansion using a branch.
A.List two advantages and disadvantages for an expansion using a subsidiary.
Unlock Deck
Unlock for access to all 9 flashcards in this deck.
Unlock Deck
k this deck
6
Boulder Ltd.is a Canadian corporation which plans to expand internationally.The company has decided to establish a wholly-owned foreign subsidiary corporation in another country.Which of the following statements is incorrect?

A)The subsidiary will be subject to taxes in the foreign country.
B)The subsidiary's profits will be included in the Canadian corporation's worldwide income.
C)Dividends received by the Canadian corporation from the foreign subsidiary are excluded from the Canadian corporation's taxable income.
D)Dividends received by the Canadian corporation from the foreign subsidiary are most often subject to a withholding tax in the foreign jurisdiction.
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Unlock for access to all 9 flashcards in this deck.
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7
If the expansion is done through a separate subsidiary, what is the tax for the Saskatchewan operation?

A)$0
B)$2,750
C)$3,000
D)$5,750
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Unlock for access to all 9 flashcards in this deck.
Unlock Deck
k this deck
8
The Running Shoe Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a branch in a foreign country.Which of the following is false?

A)The profits of the branch will be subject to income tax in the foreign country.
B)The branch profits will be included in the Canadian corporation's worldwide income.
C)A foreign tax credit can reduce the Canadian taxes payable.
D)If the foreign country has a lower tax rate, a tax benefit will be recognized.
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Unlock for access to all 9 flashcards in this deck.
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9
Which of the following lists are acceptable methods for adopting a reasonable transfer price between a Canadian parent and its foreign subsidiary corporations?

A)Comparable arm's-length selling price method; cost-plus method; resale price method
B)Cost-plus method; resale price method; profit-margin method
C)Lowest tax rate method; resale price method; comparable arm's-length selling price method
D)Comparable arm's-length selling price method; lowest tax rate method; profit-margin method
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Unlock for access to all 9 flashcards in this deck.