2. The Eastern Trading Company of Singapore ships prepackaged spices to Hong Kong, the United Kingdom, and
Question:
2. The Eastern Trading Company of Singapore ships prepackaged spices to Hong Kong, the United Kingdom, and the United States, where they are resold by sales affiliates. Eastern Trading is concerned with what might happen in Hong Kong now that control has been turned over to China. Eastern Trading has decided that it should reexamine its transfer pricing policy with its Hong Kong affiliate as a means of repositioning funds from Hong Kong to Singapore. The following table shows the present transfer pricing scheme, based on a carton of assorted, prepackaged spices, which is the typical shipment to the Hong Kong sales affiliate. What do you recommend that Eastern Trading should do?
Step by Step Answer:
ISE International Financial Management
ISBN: 9781260575316
9th International Edition
Authors: Cheol Eun, Bruce Resnick, Tuugi Chuluun