Which of the Following Occurs Under Tax Equalization

question 44

Multiple Choice

Which of the following occurs under tax equalization?

• A)Expatriates realize tax benefits whenever actual taxes are less than the hypothetical tax.
• B)The employee pays the foreign income tax, but not the U.S. government tax.
• C)Employers reimburse expatriates for the difference between the hypothetical tax and the actual income tax.
• D)The employer takes the responsibility for paying the income tax on behalf of the expatriates.

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Definitions:

Depreciation

The deliberate allocation of a physical asset's expenditure throughout its usable life.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Required Return

The minimum amount of profit an investor expects to receive on an investment, accounting for various levels of risk.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which allocates an equal amount of depreciation each year over the asset's useful life.