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Week 4 DB 2 Transfer Pricing

In generation of profit from all the divisions and

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in generation of profit from all the divisions and departments separately and this will increase the profit of the firm as a whole. The company should understand that the divisions cannot be benefited at the expense of one another. There may be situations where one division will be able to sell off its produce at market price and if it transfers the same produce to other division it will face loss. So such situations should be avoided by the company. Evaluate the accounting ethics of creating, initiating, or adjusting  transactions to repatriate excess cash for multinational firms in transfer  pricing decisions and suggest a way that this practice may be  implemented. Repatriation is the act of returning to the country of origin. Multinational companies must find legal ways to return their earnings or revenue to the company’s headquarters. It is not always an easy task. One reason is that repatriation is misjudged with tax evasion that’s why this has become the major reason of difficulty to bring back home. Accounting ethics of creation, initiation and adjustment of transactions for repatriation should start with dividends and profits. Once local taxes are paid by Multinational Company, it can easily send its profit back to overseas headquarter by way of dividend on those profits. Management service fees are paid when the parent company provides services to the foreign companies. With intercompany loans, the parent company may extend a loan to the foreign company. The interest payable can be termed as repatriation
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