Question 23

Transfer Pricing; International Considerations; Strategy As indicated in the chapter, determining the appropriate transfer price in a multinational setting is a very complex problem, with multiple strategic considerations. Consider as an example a U.S. company with a subsidiary in Italy and asubsidiary in Ireland. The Italian subsidiary produces a product at a cost of $1,000 per unit. This unitis then sold to the Irish subsidiary, which adds $100 of cost to each unit. The unit is then shipped tothe U.S. parent company, which adds an additional $100 of cost to each unit. The unit is then sold to aU.S. customer for $2,000. Assume that the tax rate in Italy is 30%, the tax rate in Ireland is 15%, andthe tax rate in the United States is 35%.Required1. Define the term transfer price. Why is transfer pricing strategically important to organizations?2. What creates income tax planning opportunities when determining transfer prices in a multinational setting? Where could one go to obtain…

Yogi Ltd. of Varanasi, India exports "Product X" to YO Ltd of Tokyo, Japan an associated enterprise for 5, 300 per product. Yogi Ltd. also exports similar product to Y Ltd and OY Ltd, who are unrelated for 5, 350 and 5,550 respectively. What is the price considered to compute profits from transaction with YO Ltd?

Required: Calculate and explain your answer related to the transfer pricing based on the condition: a. Gondo Sentosa sales per month still 30 tons and Ageng Sentosa sales per month 150 tons.  b. Gondo Sentosa sales per month still 30 tons and Ageng Sentosa sales per month 100 tons.  c. Gondo Sentosa sales per month still 30 tons and Ageng Sentosa sales per month 135 tons.

6. Division R supplies Division S and is credited with £20 per item in the intercompany account. Division S, however, is only charged £10 per item in its intercompany account. What is this transfer pricing system called? (a) Two-part transfer pricing system (b) Dual transfer pricing system (c) Intercompany recharge system (d) Head office clearing system

Illustration: Cost of Purchase ABC Co., a VAT player, imported goods from a foreign supplier and incurred the following costs: Purchase price 100,000 Import duties 10,000 Value added tax 13,000 5,000 Transportation and handling costs Commission to broker 2,000 130,000 Required: How much is the cost of purchase of the imported goods?

4. Africa, Inc. has two divisions, one located in North and the other located in South. North sells a specialized circuit to South and just recently raised the circuit's transfer price. This price hike had no effect on either the volume of circuits transferred or on South's decision of whether to acquire the circuit from either North or from an external supplier. On the basis of this information, which of the following correctly shows the effect of the transfer price on the South divisional profit and Overall company profit? O (South, Overall) = (increase, increase) (South, Overall) = (decrease, no change) O (South, Overall) = (decrease, increase) O (South, Overall) = (increase, no change

Please do not give solution in image format ? And Fast Answering Please ? And Explain Proper Step by Step.

BSF Limited is an Indian multinational company. It ships pre-packaged snacks to Hong Kong, the United Kingdom, and the United States, where sales affiliates resell these snacks. BSF, as the parent company, engages in numerous intrafirm transactions with its affiliates. Since the outbreak of COVID-19, BSF is concerned about the funds that it has in its Hong Kong affiliate. Therefore, BSF has decided that it should re-examine its transfer pricing policy with its Hong Kong affiliate to reposition funds from Hong Kong to India. The corporation tax rate in Hong Kong is 35%, whereas it is 21% in India. At present, BSF charges Hong Kong affiliate a transfer price of $100 for a Box of Snacks. Since transfer pricing is a well-known tax avoidance method or fund repositioning, Hong Kong tax authority has been vigilant in tackling such incidences. Answer the following questions related to the transfer pricing:   A. What do you recommend that BSF should do for repositioning funds from Hong Kong to…

Calculating Transfer Price Burt Inc. has a number of divisions, including the Indian Division, a producer of liquid pumps, and Maple Division, a manufacturer of boat engines. Indian Division produces the h20-model pump that can be used by Maple Division in the production of motors that regulate the raising and lowering of the boat engir stern drive unit. The market price of the h20-model is $724, and the full cost of the h20-model is $540. Required: 1. If Burt has a transfer pricing policy that requires transfer at full cost: What will the transfer price be? $ Do you suppose that Indian and Maple divisions will choose to transfer at that price? Maple Division Indian Division 2. If Burt has a transfer pricing policy that requires transfer at market price: What would the transfer price be? $ Do you suppose that Indian and Maple divisions would choose to transfer at that price? Maple Division Indian Division 3. Now suppose that Burt allows negotiated transfer pricing and that Indian…

ABC Inc. produces home appliances and sells them in the U.S. It outsources the production of the appliances to a Vietnamese manufacturer, and the imported appliances are priced in dollars. Its major competitor for appliances is located in China. Based on this information, ABC Inc. is subject to ____ exposure.   A. economic B. translation C. economic and transaction D. transaction

Revenue recognition in the Xerox case called for determining the stand-alone selling price for each of the deliverables and using it to separate out the revenue amounts. Why do you think it is important to separate out the selling prices of each element of a bundled transaction? How do these considerations relate to what Xerox did to manage its earnings? Do you think the new revenue recognition standard will change the criteria in accounting for transactions like at Xerox?

Please answer both subparts. 1. XYZ, an Australian exporter, has entered into a contract to sell goods in 6 months time and will receive USD 1 million for these goods. What type of exposure is this an example of and why? (a) Economic exposure (b) Translation exposure (c) Transaction exposure (d) Competitive exposure 2. How can a firm protect itself against economic exposure? (a) Money market hedges (b) Geographical diversification (c) Forward contract hedges (d) Futures market hedging

3. Match the following terms with the correct definition in the table below. List of possible terms: • Transfer price • Negotiated transfer price • Transfer pricing Market price • Intermediate market Term (fill in) Definition The price normally charged for a similar product to an external con- sumer The practice that focuses on how companies price goods or services transferred between a company's segments A competitive outside market for a similar product The price one division charges for a good or service sold to another division within the company A transfer price mutually agreed upon between the buying and selling divisions

Transfer Pricing; International Taxation Crain Company has a manufacturing subsidiary inSingapore that produces high-end exercise equipment for U.S. consumers. The manufacturing subsidiary has total manufacturing costs of $1,500,000, plus general and administrative expenses of$350,000. The manufacturing unit sells the equipment for $2,500,000 to the U.S. marketing subsidiary, which sells it to the final consumer for an aggregate of $3,500,000. The sales subsidiary hastotal marketing, general, and administrative costs of $200,000. Assume that Singapore has a corporate tax rate of 33% and that the U.S. tax rate is 46%. Assume that no tax treaties or other special taxtreatments apply.Required What is the effect on Crain Company’s total corporate-level taxes if the manufacturing subsidiary raises its price to the sales subsidiary by 20%?

Compute the following :- 1. Calculate the lowest acceptable transfer price for the seller (Division A)? 2. Calculate the highest acceptable transfer price for the buyer (Division B)? 3. Calculate the range of acceptable transfer prices between the two divisions? 4. Assume Division A offers to sell 15,000 units to Division B for $74 and that Division B refuses this price. What will be the loss in potential prodits for the company whole as a whole

Corporation Y, which is located in the USA, sold merchandise to Poland on credit in a transaction that was settled in Polish Zlotis and will be paid early next year. And you are preparing your financial statements for the current year and the staff in the accounting department is unclear on which method to use to present the balances in dollars. What procedure must be followed to determine the amount to be reported in the financial statement? Remeasurement Currency transfer Coversion Translation

Bidbid Company manufactures a product with a unit variable cost of OMR 95 and a unit sales price of OMR 220. Fixed manufacturing costs were OMR 480,000 when 10,000 units were produced and sold. The company can sell an additional 1,000 units at OMR 140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

Consider a US-based MNC with a wholly owned Italian subsidiary. Following a depreciation of the dollar against the euro, which of the following conclusions are correct?  Group of answer choices a. The cash flow in euros could be altered due a change in the firm's competitive position in the marketplace. b. A given operating cash flow in euros will be converted to a higher US dollar cash flow. c. Both A and B d. None of the above

Find the net exposure of the British subsidiary of the U.S. MNC with the following intra affiliate transactions shown. $15 $40 (Note: If you cannot view the image, you can download it here: Map.PNG) O $40 out $65 out E20 out. none of the options

Cost of trade credit   Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit. These terms will affect the cost of the asset for both the buyer and the seller. Consider the following case: Blue Elk Manufacturing buys most of its raw materials from a single supplier. This supplier sells to Blue Elk on terms of 2/15, net 45. The cost per period of the trade credit extended to Blue Elk, rounded to two decimal places, is___________%   Blue Elk’s trade credit has a nominal annual cost—expressed as an annual percentage rate (APR)—of_________%, assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.)   If Blue Elk’s supplier shortens the discount period by five days, this will _____________(Increase or decrease pick one) the cost of the trade credit.

not use ai please

1. What is the relevant cost to make the part? State answer in total dollars NOT per unit and as a positive number. 2. Should Ran Corporation make the part? 3. What should Ran ignore? Why? 4. What would be the impact on total Net Income if Ran corporation accepted the supplier's offer? Show a negative for a loss, positive for a gain.