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Trans produce finished gears. Operating expenses amount to $20.2 million in Finland and...

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Accounting

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Trans produce finished gears. Operating expenses amount to $20.2 million in Finland and S60.2 million in the United States exclusive of the costs of any goods transferred from Finland. Revenues in the United States are $152 million. If the metal were purchased from one of the company's U.S. forging divisions, the costs would be $30.2 million. However, if it had been purchased from an independent Finnish supplier, the cost would be $40.2 million. The marginal income tax rate is 70 percent in Finland and 30 percent in the United States Required: What is the company's total tax liability to both jurisdictions for each of the two alternative transfer pricing scenarios ($30.2 million and $40.2 million)? (Enter your answers in dollars and not in millions of dollars.) Transfer price 30.2 million40.2 million Total tax liability References eBook&Resources Worksheet Difficulty: 2 Medium Learning Objective: 15-04 Explain the economic consequences of multinational transfer prices

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