Suppose a U

question 99

Multiple Choice

Suppose a U.S.-based MNC makes bicycles with parts from its subsidiary in a low-tax East Asian country. The bicycle frames are made here, the component parts (cranksets, wheels, and so on) are made abroad, the bicycles are assembled in Japan and reimported to the U.S. It can reduce its reported U.S. income-and increase its subsidiary's profits-by

• A)overcharging its subsidiaries for the U.S.-made frames.
• B)undercharging its subsidiaries for the U.S.-made frames.
• C)assembling the bicycles in the U.S.
• D)none of the above

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Definitions:

Goodwill

The intangible asset that arises as a result of the acquisition of one company by another for a premium value, representing the reputation, brand, or customer relations.

Equal Emphasis

Giving the same level of importance or attention to all elements or aspects of something.

Fairness

The quality of making judgments that are free from discrimination or dishonesty; impartiality.

You-viewpoint

A perspective in communication emphasizing the interests and concerns of the audience or recipient.