Trans Atlantic Metals has two operating divisions. Its forging operation in Finland forges raw metal, cuts it,
Question:
If the metal were purchased from one of the company’s U.S. forging divisions, the costs would be $15 million. However, if it had been purchased from an independent Finnish supplier, the cost would be $20 million. The marginal income tax rate is 60 percent in Finland and 40 percent in the United States.
Required
a. What is the company’s total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios ($15 million and $20 million)?
b. Is it ethical to choose the transfer price based on the impact on taxes?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Question Posted: