The Organizational Form of a MNC Can Affect the Timing

question 79

Multiple Choice

The organizational form of a MNC can affect the timing of a tax liability. This means

• A)the principle of tax equity might be violated.
• B)as long as regardless of the country in which an affiliate of a MNC earns taxable income, the same tax rates apply, then the tax due date doesn't matter.
• C)tax timing will even out over a reporting cycle, so there is no big deal here.
• D)none of the above

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Definitions:

Amortization

The process of spreading out the cost of an intangible asset over its useful life or the repayment of loan principal over time.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, reflected in its income statement.

Contractual Interest Rate

The agreed-upon rate of interest to be paid on loans or bonds, specified within a contract.

Annual Rate

A yearly interest rate that accounts for compounding over a 12-month period.