Question - In January, 2013, Golf-Travel formally opened its European operations, called Europe-Golf in Portmarnock, Ireland as a wholly owned subsidiary of Golf-Travel. During 2013, the subsidiary's performance exceeded expectations by hosting almost 400 individual golf trips and 200 corporate outings. At the end of the year, the subsidiary reported pretax income of €324,260 and the subsidiary paid Irish taxes of €40,533, leaving a net income of €283,727.
Requirements:
1. Ben Watson has asked you, the company's CFO, to research the U. S. GAAP and provide a summary for the tax issues of earnings of foreign subsidiaries. Especially, he is interested in understanding the different financial reporting issues of a strategy that remits the earnings back to the United States versus a strategy of permanently reinvesting the earnings back into the Irish subsidiary.
2. What would be your answers to the issues in Requirement 1 if it is under IFRS?
Provide proper references from FASB Codification and from IFRS in proper form.