Company MHF Operates Subsidiaries in Two Countries

question 74

Multiple Choice

Company MHF operates subsidiaries in two countries.One of the subsidiaries consumes the output of the other in the production of a good for sale to the public.The company could increase cash flows by:

• A)Using a transfer price based on full cost.
• B)Using a transfer price to transfer as much income as possible to the subsidiary located in the lower tax country.
• C)Using a transfer price based on market value.
• D)Using a transfer price to transfer as much income as possible to the subsidiary located in the higher tax country.

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Definitions:

Traffic Signal

A device that controls the flow of vehicles and pedestrians through intersections or roadways by using lights of standard colors (red, yellow, green).

Network

A group of interconnected computers, servers, mainframes, network devices, peripherals, or other devices to share data and resources.

Access Point

A networking hardware device that allows wireless devices to connect to a wired network using Wi-Fi or related standards.

Main Router

The primary device in a network that manages traffic between the local network and the internet or other networks.