management control systems transfer pricing, and multinational considerations

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1、ManagementControlSystems,22TransferPricing,andMultinationalConsiderationsLearningObjectivesTransferpricingisthepriceonesubunitofacompanychargesfortheservicesitprovidesanothersubunitof1.Describeamanagementcontrolthesamecompany.systemanditsthreekeypropertiesTopmanagementusestra

2、nsferprices(1)tofocusmanagers’attention2.Describethebenefitsandcostsofontheperformanceoftheirownsubunitsand(2)toplananddecentralizationcoordinatetheactionsofdifferentsubunitstomaximizethecompany’sincomeasawhole.Whiletransferpricingisproductive,itcanalsobe3.Explaintransferprice

3、sandfourcri-teriausedtoevaluatealternativecontentious,becausemanagersofdifferentsubunitsoftenhaveverytransfer-pricingmethodsdifferentpreferencesabouthowtransferpricesshouldbeset.Forexample,somemanagerspreferthepricesbebasedonmarket4.Illustratehowmarket-basedtrans-prices.Others

4、preferthepricesbebasedoncostsalone.Controversyferpricespromotegoalcongruenceinperfectlycompetitivemarketsalsoariseswhenmultinationalcorporationsseektoreducetheiroverallincometaxburdenbycharginghightransferpricestounitslocatedin5.Understandhowtoavoidmakingcountrieswithhightaxra

5、tes.Manycountries,includingtheUnitedsuboptimaldecisionswhentrans-ferpricesarebasedonfullcostStates,attempttorestrictthispractice,asthefollowingarticleshows.plusamarkup6.DescribetherangeoffeasibletransferpriceswhenthereisSymantecWins$545millionOpinioninunusedcapacityTransferPri

6、cingDisputewiththeIRS17.Applyageneralguidelinefordeter-miningaminimumtransferpriceSymantecCorp.,alargeU.S.softwarecompany,wonasignificant8.Incorporateincometaxconsidera-courtdecisioninDecember2009,potentiallysavingit$545millionintionsinmultinationaltransferpricingcontestedback

7、taxes.TheInternalRevenueService(IRS)hadbeenseekingbacktaxesitallegedwereowedbyVeritasSoftwareCorp.,acompanyacquiredbySymantecin2005.Thedisputewasoverthecompany’sformulafor“transferpricing,”acomplexsetofrulesdetermininghowcompaniessetprices,fees,andcost-allocationarrangementsbe

8、tweentheiroperationsindifferenttaxjurisdictions.Atissuewereth