Question 1

Which of the following taxes does transfer pricing affect?
A) customs duties
B) dividend taxes
C) corporate taxes
D) property taxes

Accepted Answer

The answer of Which of the following taxes does transfer...

Question 2

Which of the following helps in avoiding costly transfer-pricing disputes between taxpayers and tax authorities?
A) transfer price redressal panel
B) grievance redressal forum
C) transfer price agreements
D) advanced pricing agreements

Accepted Answer

Advanced pricing agreements (APAs) are agreements between taxpayers and tax authorities that determine an appropriate transfer pricing methodology and avoid transfer pricing disputes. They provide certainty to taxpayers regarding their transfer pricing arrangements and reduce the risk of costly litigation. Transfer price agreements (C) may also help avoid disputes, but they do not provide the same level of certainty as APAs. Transfer price redressal panels (A) and grievance redressal forums (B) may be options for resolving transfer pricing disputes but do not prevent them from occurring in the first place.

Question 3

What does Section 482 of the U.S.Internal Revenue Code govern?

Accepted Answer

The answer of What does Section 482 of the U.S.Internal...

Question 4

Global Giant,a multinational corporation,has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country.If Global Giant wants to minimize its worldwide tax liability,we would expect Global Giant to ________.
A) stop producing in the low tax rate country
B) stop marketing in the high tax rate country
C) establish a low transfer price when the producing unit sells to the marketing unit
D) establish a high transfer price when the producing unit sells to the marketing unit

Accepted Answer

By establishing a high transfer price when the producing unit sells to the marketing unit, the producing subsidiary would report higher profits, resulting in higher taxes paid in the low tax rate country. Meanwhile, the marketing subsidiary would report lower profits due to higher costs, resulting in lower taxes paid in the high tax country. This can help the Global Giant minimize its worldwide tax liability.

Question 5

Which of the following sections of U.S.Internal Revenue Code govern how multinationals can set transfer prices for tax purposes?
A) Section 328
B) Section 382
C) Section 428
D) Section 482

Accepted Answer

Section 482 of the U.S. Internal Revenue Code governs transfer pricing rules for multinationals. It allows the IRS to adjust prices and reallocate income between related entities to prevent tax avoidance through transfer pricing.

Question 6

What is the role of unused capacity within the selling division in the determination of a negotiated transfer price to another division?

Accepted Answer

The answer of What is the role of unused capacity...

Question 7

The tariffs and customs duties governments levy on imports of products into a country also affect the transfer pricing practices of multinationals.

Accepted Answer

Tariffs and customs duties can increase the cost of importing products, which may impact the pricing decisions of multinationals. They may need to adjust their transfer prices to account for these additional costs and to ensure compliance with tax laws and regulations.

Question 8

Companies have an incentive to lower the transfer prices of products they are exporting into a country to reduce the tariffs and customs duties charged on those products.

Accepted Answer

Lowering the transfer prices of exported products can help companies reduce the tariffs and customs duties they have to pay, giving them a competitive advantage in the market. However, authorities may scrutinize these transfer prices to ensure they are not being manipulated to evade taxes.

Question 9

A company has a plant in a high tax jurisdiction that produces products for a facility in a low tax jurisdiction.Suggest a strategy,including transfer prices,which will result in the lowest tax for the overall corporation.

Accepted Answer

The answer of A company has a plant in a...

Question 10

A company may choose to keep one set of accounting records for tax reporting and a second set for internal management reporting.

Accepted Answer

This is a common practice for many companies. The accounting records used for tax reporting must comply with specific regulations and laws, while the internal management reporting records may be tailored to meet specific business needs and goals.

Question 11

Match between columns
                        Premises: Bargaining between selling and buying units
Budgeted costs
145% of full costs
Internal product transfers are required if goods are available internally
Manufacturing costs plus marketing costs plus distribution costs plus customer service costs
Prices listed in a trade journal
Selling price less normal sales commissions
Variable manufacturing cost plus a markup

Accepted Answer

The Answer of market-based and cost-based and negotiated and all is...

Question 12

Match between columns
                        Premises: Freedom for managers at lower organizational levels to make decisions
Gathering information may be very expensive
Greater responsiveness to user needs
Have few interdependencies among divisions
Maximum constraints and minimum freedom for managers at lowest levels
Maximization of benefits over costs
Minimization of duplicate functions
Minimum of suboptimization
Multiple responsibility centers with various reporting units
Profit centers

Accepted Answer

The Answer of centralized organization and decentralized organization and Both is...

Question 13

Match between columns
                        Premises: On-time delivery of gasoline from refineries to retail stations
Customer satisfaction
Common stock price
Return on investment
Market share
Number of days lost to accidents
Employee satisfaction
Friendliness of employees
Repeat purchases
Cash flow from operations

Accepted Answer

The Answer of Financial and Customer and Internal Business Process is...

Quiz 22: Management Control Systems, transfer Pricing, and Multinational Considerations

Which of the following taxes does transfer pricing affect?

Which of the following helps in avoiding costly transfer-pricing disputes between taxpayers and tax authorities?

What does Section 482 of the U.S.Internal Revenue Code govern?

Global Giant,a multinational corporation,has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country.If Global Giant wants to minimize its worldwide tax liability,we would expect Global Giant to ________.

Which of the following sections of U.S.Internal Revenue Code govern how multinationals can set transfer prices for tax purposes?

What is the role of unused capacity within the selling division in the determination of a negotiated transfer price to another division?

The tariffs and customs duties governments levy on imports of products into a country also affect the transfer pricing practices of multinationals.

Companies have an incentive to lower the transfer prices of products they are exporting into a country to reduce the tariffs and customs duties charged on those products.

A company has a plant in a high tax jurisdiction that produces products for a facility in a low tax jurisdiction.Suggest a strategy,including transfer prices,which will result in the lowest tax for the overall corporation.

A company may choose to keep one set of accounting records for tax reporting and a second set for internal management reporting.

For each of the following, identify whether it BEST relates to:

For each of the following activities, characteristics, and applications, identify whether they can be found in:

For each of the following Balanced Scorecard measures, identify which of the four perspectives A-D the measure best represents.