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:

Fake Cigarettes

Products designed to mimic the appearance and sometimes the sensation of smoking, often used as aids in quitting smoking.

Cause-Effect Relationships

The principle that one event (the cause) directly leads to another event (the effect).

Independent Variable

The variable in an experiment that is manipulated to observe its effect on the dependent variable.

Manipulate

To control or influence something or someone skillfully, often in an unfair manner.