Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. subsidiary x, located in a country with a 25% corp

Subsidiary x, located in a country with a 25% corporate income tax rate, and Subsidiary...

60.1K

Verified Solution

Question

Accounting

Subsidiary x, located in a country with a 25% corporate income tax rate, and Subsidiary Y, located in a country with a 35% corporate income tax rate are part of a decentralized organization. They have been engaged in trade with one another using a negotiated transfer price of $50 per unit for sales by Subsidiary x to Subsidiary Y. Pipko, the parent company of both Subsidiary x and Subsidiary Y recently set a discretionary transfer price of $80 per unit for the transfers between x and Y. How will subsidiary managers in the decentralized organization view this decision by parent company management?
Multiple Choice
The manager of Subsidiary Y will be concerned about the decline in Subsidiary Y's profit and the effect this will have on his/her bonus.
They will embrace it whole-heartedly because corporate profits will increase.
They won't mind because the intercompany transaction will still occur.
They won't notice because all decisions in the decentralized organization are made by the parent.
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Choose all of the statements that correctly define the geometric term A Lines that never...

Geometry
Q

Mary, the director of nursing at a regional blood bank, is concerned about the declining number...

Medical Sciences
Q

Discuss the Evolution of finance in the perspective of Traditional, Transitional and modern phase

General Management
Q

How many zeros are there at the end of 2019! in octal notation ?

Advance Math
Q

The damping force on an oscillator is directly proportional to the velocity The units of...

Physics
Q

1 A 10 kilogram ball rolls down a stair case from a 20 m second...

Physics
Q

Write the initial simplex table for the linear programming problem Do not solve A baker...

Calculus
Q

5 Find values for A and B so that A 5B 25 Type your answer...

Algebra
Q

Jorge Company bottles and B-Lite, a diet soft drink. The beverage is sold for 50...

Accounting
Q

Please answer all three for a thumbs up A...

Accounting
Q

Problem 10 Prescott Football Manufacturing had the following operating results for 2019: sales...

Accounting
Q

Prepare a Cost sheet showing cost per cabinet and profit per cabinet from the following...

Accounting