17. Raval Company, based in Sydney, Australia, has a wholly-owned subsidiary in Singapore. The Singaporean subsidiary manufactures bicycles at a cost equal to A$20 per bicycle, which it sells to Raval at an FOB shipping point price of AS 100 each. Raval pays shipping costs of AS10 per bicycle and an import duty of 10 percent on the AS 100 invoice price. Raval sells the bicycles in Australia for AS200 each. The Australian tax authority discovers that Raval's Singaporean subsidiary also sells its bleycles to uncontrolled Australian customers at a price of AS80 each. Accordingly, the Australian tax authority makes a transfer pricing adjustment to Raval's tax return, which decreases Raval's cost of goods sold by AS20 per bicycle. An offsetting adjustment (refund) is made for the import duty previously paid. The effective income tax rate in Singapore is 17 percent, and Raval's effective income tax rate in Australia is 30 percent b. Discuss Raval Company management's decision to allow its Singaporean subsidiary to charge a higher price to Raval than to uncontrolled customers in Australia c. Assess the likelihood that the Singaporean tax authority will provide a correlative adjustment to Raval Company