How should managers consider income tax issues when choosing a transfer-pricing method?

Q: what is a potential with a temporary tax difference in design to increase demand

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Q: Under what conditions is a market-based transfer price most likely to be used?

A: Transfer Pricing: It is termed as the cost which is charged by the one department of the company…

Q: How to calculate the indexed cost base for capital gains tax

A: SOLUTION- CAPITAL GAIN TAX- IT IS A TYPE OF TAX APPLIED  TO THE PROFITS EARNED ON THE SALE OF AN…

Q: How would you define profit planning? What is the importance of profit planning?

A: a) Profit planning is a progression of steps being taken to arrive at an ideal level of profit. Such…

Q: How is the compressed adjusted present value (APV) model different from the Modigliani and Miller…

A: Here is the Answer:

Q: What are the calculation formulas for transfer pricing?

A: There are many methods for determining the transfer price. Most businesses actually set the transfer…

Q: Define the term profit oriented.

A: Profit Oriented Company: Profit oriented company are refer as the company which main aim is to earn…

Q: Tax experts believes that tax planning tools puts the control of when to pay in the hands of…

A: Introduction Tax Planning is an act of arranging and managing transactions in such a way that, tax…

Q: Explain how useful the price mechanism is in tackling the basic economic problem?

A: the main role of price mechanism in basic economic problem is allocate scare resources in market…

Q: In general terms, how would a change ininvestment opportunities affect the payoutratio under the…

A: Answer: In the residual dividend policy, the distribution is calculated after the company’s spending…

Q: explain what a growing balance in the deffered income tax liability is likely to indicate about a…

A: This question deals with the IFRS 12 "Deferred tax" As per IFRS,  When there is temporary taxable…

Q: What are the benefits of Profitability Analysis?

A: Profitability analysis is a tool used by the firm to analyze cost and revenue to know whether the…

Q: What is passive income? Explain and give examples.

A: Passive Income  An income from a source which is somewhat diverse than  a contractor or an employer…

Q: From a tax planning standpoint, what form of compensation is least desirable for the manager? Forthe…

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Q: Calculate the lowest acceptable transfer price for the seller (Division A) ?

A: Calculation of contribution per unit of Division A Particulars Amount Selling price per unit 76…

Q: What variable affecting gross profit should the manager focus his attention? Why?

A: Gross Profit is the profit arrived at by deducting cost of goods sold from the turnover or the…

Q: Describe the process of using the Income-Tax Rate in Project Evaluation?

A: The income tax rate is used to determine the cash flow after tax. As cash flow after tax helps in…

Q: What are the pitfalls of franchising?

A: Franchising is a licensing that one party takes from the business owner. It allow that party to…

Q: What is Output tax

A: In order to generate revenue, the government frequently employs and imposes indirect taxes. They are…

Q: Is it a good strategy to tax Lower income groups more as compared to higher income groups to remove…

A: Income distribution refers to the term which is defined as how the aggregate income of nation is…

Q: Which of the following transfer price approaches is used when the transfer price is set at the…

A: Transfer Price  : Price at which related parties transact with each other is known as transfer…

Q: What is gross profit? How do you calculate it?

A: Gross margin (gross profit): Gross margin is the amount of revenue earned from goods sold over the…

Q: How does capacity affect transfer pricing decisions?

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Q: Calculate: Tax management efficiency Expense control efficiency Asset management efficiency

A: Tax Management Efficiency = Net IncomeNet operating Income before taxes   Expense Control Efficiency…

Q: What is "constructive receipt doctrine? Discuss What is "economic benefit doctrine? Discuss

A: Constructive receipt doctrine: According to constructive receipt doctrine policy, the taxpayer…

Q: What is Transfer Pricing? What are the approaches in determining transfer prices? In your own…

A: Explanation of transfer pricing and approaches determining transfer pricing are as follows.

Q: What will be the Conditions for Positive Leverage Before Tax?

A: Definition of Positive Leverage. Positive Leverage is a situation when a business or individual…

Q: Explain with hypothetical example the effect of Investment Tax Credit.

A: Investment Tax Credit is an opportunity provided while filing for taxation where a deduction of a…

Q: What tax rate should be used in calculating the taxes on the investment's projected income?

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: How does the residual income approach overcome this problem?

A: Definition: ROI: It is a measure of the amount of return on a particular investment with respect to…

Q: what is the special consumption tax?

A: Consumption can be briefly defined as the spending by individuals and households on final goods and…

Q: How do taxes affect the target capital structure?

A: One of the key issues that overseers of corporations should take into consideration once designing…

Q: Explain the benefits of a Residual Income structure within an investment center framework.

A: The benefits of residual income are as under :  1) It takes into account the opportunity cost of…