If a Foreign Subsidiary Is Located in a Low Tax

question 5

Multiple Choice

If a foreign subsidiary is located in a low tax country, the parent company would probably use a ________.

• A)high transfer price on inventory shipped from the parent to the subsidiary
• B)high transfer price on goods sold by the subsidiary to the parent
• C)low transfer price on inventory shipped from the subsidiary to the parent
• D)tax credit price to minimize local tax liabilities

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Definitions:

Mixed Sale

A contract that combines a good with a service or real estate.

Conditional Title

A legal status indicating that ownership of a property or asset will transfer from one party to another only after specific conditions have been met.

Unconditional Title

A legal term indicating absolute ownership of property or assets without any encumbrances or conditions.

Implied Title

A legal concept indicating that ownership is suggested or inferred through actions or circumstances rather than explicitly conveyed via a formal document.