Americo is a U.S.-based multinational manufacturing firm with wholly owned subsidiaries in Brazil, Germany, and China, in
Question:
Americo is a U.S.-based multinational manufacturing firm with wholly owned subsidiaries in Brazil, Germany, and China, in addition to domestic operations in the United States. Americo is traded on the NASDAQ. Americo currently has 658,000 shares outstanding. The basic operating characteristics of the various business units is as follows:
Business Performance (000s) | U.S. Parent (US$) | Brazilian Subsidiary (reais, R$) | German Subsidiary (euros, €) | Chinese Subsidiary (yuan, ¥) |
Earnings before taxes (EBT) | $4,500 | R$6,250 | €4,500 | ¥2,500 |
Corporate income tax rate | 35% | 25% | 40% | 30% |
Average exchange rate for the period | — | R$1.80/$ | €0.7018/$ | ¥7.750/$ |
Americo Industries’ Consolidate Earnings. Americo must pay corporate income tax in each country in which it currently has operations.
a. After deducting taxes in each country, what are Americo’s consolidated earnings and consolidated earnings per share in U.S. dollars?
b. What proportion of Americo’s consolidated earnings arise from each individual country?
c. What proportion of Americo’s consolidated earnings arise from outside the United States?
Expert Answer:
a Calculation of net profit of individual subsidiary in 000 terms i Brazilian subsidiary Earnings before tax R6220 Less Tax 25 R1555 6220 25 Net profi... View the full answer
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078025778
17th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
