Details of this Paper

Subsidiary X, located in a country with a 25% corp...

Description

Solution


Question

Subsidiary X, located in a country with a 25% corporate income tax rate, and Subsidiary Y, located in a country with a 35% corporate income tax rate are part of a decentralized organization. They have been engaged in trade with one another using a negotiated transfer price of $50 per unit for sales by Subsidiary X to Subsidiary Y. Pipko, the parent company of both Subsidiary X and Subsidiary Y recently set a discretionary transfer price of $80 per unit for the transfers between X and Y. The cost to manufacture the product is $40 per unit. Which is the best transfer price?

 

Paper#3423 | Written in 18-Jul-2015

Price : $25
SiteLock