Question
BLAND Corporation has its two wholly owned subsidiaries, Dawn and Petry, in Country A and Country B, respectively. Petry purchases a part for its production
BLAND Corporation has its two wholly owned subsidiaries, Dawn and Petry, in Country A and Country B, respectively. Petry purchases a part for its production from Dawn. Country B has a higher tax rate than Country A. To minimize the corporation's overall income tax, how should BLAND set its transfer prices between its subsidiaries?
Group of answer choices
A) Transfer pricing does not affect the total tax paid by the corporation.
B) Dawn should sell parts to Petry at low prices.
C) Dawn should sell parts to Petry at high prices.
D) It doesn't matter what transfer price is used because the subsidiaries are part of the same company.
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