ACT 520 Colorado State University Global Week 6 A Case Study on Apple Questions

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Business Finance

ACT 520

Colorado State University Global

ACT

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ptions #1: A Case Study on Apple: Should U.S. and Global Regulators Take a Bigger Tax Bite Out of Technology Companies

Read the attached case study (Links to an external site.) and then answer the following requirements:

  1. In your own words, describe:
    1. What is Apple attempting to achieve?
    2. How is it possible that Apple, as a U.S. company, does not pay the regular corporate tax rate?
  2. Provide examples and comments in which Apple has been criticized for not paying appropriate taxes in other foreign countries in which it conducts business.
  3. The case and Senate Subcommittee hearings mention that other technology companies are using tax minimization techniques similar to Apple. Identify one other global company that engages in similar tax minimization strategies.
  4. Provide:
    1. article citations;
    2. a description of techniques used; and
    3. a description of criticism the company may receive from foreign governments.
  5. ASC 740-30-25 covers the topic of undistributed earnings of subsidiaries and corporate joint ventures.
    1. In your opinion, how does ASC 740-30-25 provide incentive to U.S. multinational corporations to shift or keep profits offshore?
    2. How can this financial accounting standard be used as a tool for earnings management?
    3. What evidence exists that corporate tax executives favor the Indefinite Reversal Exemption?

References:

Holttzblatt, M. A., Geekie, J., Tschakert, N. (2016). Should U.S. and global regulators take a bigger tax bite out of technology companies? A case on apple’s international tax minimization and reporting strategies. Issues in Accounting Education, 31(1), 133-148.

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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.Answer posted please confirmKindly go through the work and let me know if you need anything rectified

SHOULD U.S. AND GLOBAL REGULATORS TAKE A BIGGER TAX BITE OUT OF
TECHNOLOGY COMPANIES
Name
Course
Institution

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Apple attempt at excise evasion
Apple has realized that there is a loophole whereby it can take part in tax evasion. It is one of the
possible manners in which the firm can be able to make profits. Furthermore, they have been
able to identify countries where the tax rates are lower (Holttzblatt, Geekie, and Tschakert,
2016). Thus, being able to practice offshore tax shelter. They have devised ways of obtaining the
funds through a means of borrowing or even used to invest domestic assets in the host country.
Furthermore, tax models in the USA are observed to be problematic. This is based on the various
available sectors. They are of influence and have significant influence when it comes to the
digital frameworks (Holttzblatt, Geekie, and Tschakert, 2016). Furthermore, the other
nonphysical or intangible assets can be moved by a means that would lead to tax avoidance on
the systems that have been provided.
Probability of avoiding regular corporate tax rate
The amount of money that the company makes was estimated to be two hundred and fifty-two
billion dollars in terms of profit. Furthermore, this is money that it uses in terms of providing
profits. Furthermore, when investing offshore, the firm can evade taxes, resulting in the firm
having a lapse (Holttzblatt, Geekie, and Tschakert, 2016). In terms of tax evasion, the firm would
be estimated to have ninety percent of its physical cash. Nevertheless, when it is sent back to the
USA, it would be taxed. Nevertheless, the firm would avoid sending it back hence using it
locally or at some point obtaining it as a gift or borrowed funds.
It is estimated that the firm had a tax ove...


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