TABLE 15.1 Use the Information to Answer Following Question(s)

question 13

Multiple Choice

TABLE 15.1
Use the information to answer following question(s) .
BayArea Designs Inc., located in Northern California, has two international subsidiaries, one located in the Ukraine, the other in Korea. Consider the information below to answer the next several questions.

-Refer to Table 15.1. The additional U.S. taxes due on the repatriation of income from the Ukraine to the United States, alone, assuming a 50% payout rate, is:

• A) excess foreign tax credits of $110,000.
• B) additional U.S. taxes due of $97,000.
• C) additional U.S. taxes due of $36,500.
• D) excess foreign tax credits of $18,500.

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Definitions:

Passive Benchmark

A standard, typically an index, against which the performance of an investment portfolio can be gauged, emphasizing a passive investment strategy.

Foreign Exchange Risk

The potential for financial loss due to fluctuations in exchange rates affecting foreign-denominated investments or transactions.

Translation Exposure

The risk that a company's financial statements can be affected by changes in exchange rates when foreign operations are consolidated.

Hedging Risk

The process of making an investment or entering into a financial transaction in order to reduce the risk of adverse price movements in an asset.