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Foreign investment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Foreign investment

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • May 30, 2014 at 7:50 pm #171997
    hasanali95
    Member
    • Topics: 239
    • Replies: 248
    • ☆☆☆

    1)If a co is to invest in a subsidiary abroad and that subsidiary is only expected to remit 50%(suppose) to the Parent,do we only account for the 50% repatriated amount as the NPV to decide whether to invest or not?

    2)if a company is switching from one project to another one and so there is an opportunity cost of labor ,do we account for the opportunity cost as tax allowable in the NPV calculations or do we take it as a non tax allowable expense?

    Thank you very much in advance 😀

    May 31, 2014 at 11:32 am #172092
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54717
    • ☆☆☆☆☆

    1) You only convert the remitted amount. However, you need to check from the question what happens to the retained amount – maybe it is remitted to the parent’s country at a later date.

    2) If there is an opportunity cost then it will be treated as tax allowable like a direct cost would be.

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