90) The age of a foreign subsidiary
A) has no influence on payment of dividends.
B) indicates the number of capital investment needs; older subsidiaries have higher needs.
C) influences dividend policy in that younger subsidiaries tend to remit a higher proportion of their
earnings in dividends to the parent company.
D) influences dividend policy in that older subsidiaries tend to remit a higher proportion of their
earnings in dividends to the parent company.
91) ________ represent the remuneration paid to the owners of technology, patents, or trade names
for the use of the technology or the right to manufacture and/or sell products under patents or trade
names.
A) Royalties
B) Transfer costs
C) Fees
D) Licensing costs
92) It is common for a parent company to charge its foreign subsidiaries ________ for the
technology, patents, or trade names it has transferred to them.
A) transfer fees
B) royalties
C) an internal forward rate
D) usage fees
93) Royalties and fees have certain tax advantages over ________, particularly when the corporate
tax rate is higher in the host country than in the parent‘s home country.
A) transaction costs
B) deferrals
C) dividends
D) transfer fees
94) Which of the following is one of the gains derived by adjusting transfer prices?
A) The firm can reduce its tax liabilities by using transfer prices to shift earnings from a low-tax
country to a high-tax one.
B) The firm can use transfer prices to move funds out of a country where a significant currency
appreciation is expected.
C) The firm can use transfer prices to move funds from a parent company to the subsidiary (or a tax
haven) when financial transfers in the form of dividends are restricted or blocked by host-country
government policies.
D) The firm can use transfer prices to reduce the import duties it must pay when an ad valorem
tariff is in force—a tariff assessed as a percentage of value.
95) Describe the importance of accounting information in business.
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96) Identify a key accounting problem that international businesses are confronted with but that
does not confront purely domestic businesses. Substantiate with a suitable example.
97) How is a country‘s accounting system affected by the providers of capital? Explain with the
help of suitable examples.
98) Briefly differentiate accounting standards and auditing standards.
99) What are the shortcomings of IASB?
100) What are the main steps in the control process of a typical firm?
101) Describe the three exchange rates that can be used to translate foreign currencies into the
corporate currency in setting budgets and in the subsequent tracking of performance that Lessard
and Lorange pointed out.
102) What are the nine possible combinations of the three exchange rates proposed by Lessard and
Lorange in the control process?
103) Explain the concept of transfer pricing.
104) Explain why the evaluation of a subsidiary should be kept separate from the evaluation of its
manager.
105) Describe three factors that complicate the process of an international business.
106) Describe the problem of blocked earnings.
107) What are the considerations when seeking external financing for international business?
108) Define tax credit and tax treaty.
109) What are the advantages of using royalties and fees to move money across borders?