Southport Minerals

The company has acquired the proper financing to proceed with the project. Foreign countries have different accounting systems and tax plans. This would lead to a degree of discrepancies, creating confusion. Third a separate entity, creates shelter against political risk. Therefore, two sets of book would be needed to reconcile foreign and domestic statements. Southport has already had property expropriated in Cuba. Once the cash flow analysis is done in the foreign currency the income transferred back to the United States will have a different tax rate than the domestic rate of 34%. rices have led Southport to consider this opportunity. If operating under one corporate entity each transaction must be translated. Also, Southport must consider the cross-country tax rate associated with Indonesia. The parent company is protected from political turmoil inside the foreign country. The board is very wary of any future foreign risks. Several reasons support the choice of creating a subsidiary rather than doing business as the current corporation. However, they must decide how to discount the cash flows to determine if the project is acceptable. Also, differences in tax and accounting regulations are a consideration.