Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A)When the foreign tax rate is less than the U.S.tax rate,deferral can provide significant benefits.
• B)The U.S.tax liability is not incurred until the profits are brought back home if the foreign operation is set up as a foreign branch rather than as a separately incorporated subsidiary.
• C)If a company chooses not to repatriate £12.5 million in pre-tax earnings,for example,it effectively reinvests those earnings abroad and defers its U.S.tax liability.
• D)When the foreign tax rates exceed the U.S.tax rates,there are no benefits to deferral because in such a case there is no additional U.S.tax liability.

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Definitions:

Net Working Capital (NWC)

The difference between a company's current assets and current liabilities, indicating its short-term financial health.

Sales Price

The actual amount for which a product or service is sold in the market.

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced in a business.

Fixed Costs

Expenses that do not change with the level of production or sales.