Division A transfers a profitable subassembly to Division B, where it is assembled into a final product. Division A is located in New Zealand, which has a high tax rate. Division B is located in Thailand, which has a low tax rate. Ideally, (1) which type of before tax income should each division report from the transfer and (2) what type of transfer price should be set for the subassembly?
Definitions:
Plasma Concentration
The amount of a substance, usually a drug, present in the blood plasma at any given time, important for determining dosages and understanding pharmacokinetics.
Arteries
Blood vessels that carry oxygenated blood away from the heart to various parts of the body.
Capillary Bed
A network of capillaries, small blood vessels, enabling the exchange of oxygen, carbon dioxide, and nutrients.
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