Eugene Corp , a U.S. corporation, owns two subsidiaries, Adops , a U.S. corporation, and Flops, a
Question:
Eugene Corp , a U.S. corporation, owns two subsidiaries, Adops , a U.S. corporation, and Flops, a foreign subsidiary incorporated in country X. Adops manufactures hats at a cost of $10 per unit and sells them to Flops for $12 per unit. Flops sells them to unrelated retailers in country X for $25 per unit. Adops also sells the same hats to Bobby, an unrelated clothing distributor in the country X, for $16 per unit. Eugene sells shirts to Bobby for $12 per unit and Bobby resells the shirts to retailers for $15 per unit in country X. Eugene also manufactures watches for a cost of $5 per unit and sells them to Bobby for $7.50 per unit.
What do you recommend as the transfer price for the hats sold by Adops to Flops using the Comparable Uncontrolled Price Method?
How about when using the Resale Price Method? How about when using the Cost Plus Method?
Andersons Business Law and the Legal Environment
ISBN: 978-1305575080
23rd edition
Authors: David P. Twomey, Marianne M. Jennings, Stephanie M Greene