[jeff]

@h0wdyus

Incorrect

The answer is B. Comparable sales.

“The use of comparable sales is not an income approach to valuation of a business, it is a market approach. Under the comparable sales approach, the value of a business is determined by comparing it to other entities with comparable characteristics for which the value is more readily determinable.”

This was a tricky one

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[h0wdyus]

according to 8.65% the numerator would be 21625 hmmm.. don't know….

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[WANNABE_CPA]

Solution : The cost to issue the commercial paper is the $20000 original issue discount (1 million -980000), plus transaction costs of $1200 for a total of 21200.

It costs 21200 to borrow $980000 for 3 months.The 3 month effective periodic % cost is 2.16% i.e 21200/980000.

Effective annualized percentage cost is approximately 8.65%(2.16 x 4)

FAR : 68, 74, 83 Thank you God 🙂
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REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[h0wdyus]

use snipping tool on your pc. It will copy anything as a screen shot. I don't have becker.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

how can we divide by 980,000 it should be divided by 1000,000. anyway….

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

to calculate effective rate we will take 980,000 as denominator. That is correct since effectively we only got 980,000 and not 1 million, and we are paying 21200 as the finance charge on 980,000 the funds made available to us.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

to calculate effective rate we will take 980,000 as denominator. That is correct since effectively we only got 980,000 and not 1 million, and we are paying 21200 as the finance charge on 980,000 the funds made available to us.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[stoleway]

ill Jacks is preparing for her job interview for an entry level position in the international tax department at Conglomo Co., a multinational corporation headquartered in the U.S. A key part of her role will be assisting in transfer pricing decisions. Which of the following statement about transfer pricing is FALSE?

A Transfer pricing refers to establishment of prices for products and services bought and sold across international borders between related parties.

B It is advantageous for Conglomo Co. to maximize its sales price to its subsidiary in Teenistan, a nation with lower income tax rate than that of the U.S.

C When purchasing from its subsidiary in Inflatosburg, a small nation with an income tax rate higher than that of the U.S., Conglomo Co. should minimize its purchase price.

D In response to the transfer pricing strategies of multinational firms, many foreign jurisdictions have implemented tax regulations that are designed to align transfer prices with market prices.

–

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[h0wdyus]

B. is false. You want to transfer goods at a lowest possible price to foreign country since the gain will be higher in the foreign country that has lower tax rates. While here in US you will show very low price and low profit and save on tax.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[stoleway]

correct

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[linkman311]

@h0wdyus Can you explain that in a different way? Or better yet, the goal of transfer pricing? Is it to maximize profit between intercompany sales or reduce taxes (if so, reduce taxes of parent or total taxes across all subsidiaries)?

Confidence is a prerequisite for success

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AUD - 1/1
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Have Becker, wish I got Roger

[h0wdyus]

In this case. The subsidiary is in a country that has lower taxes. So it makes sense for the subsidiary to have artificially lower cost, so that when they sell it they make a huge profit, but since the taxes are low, the sub will pay very little taxes.

While the US company in USA sells ( transfers ) the good to sub at very low selling price, thereby making very little profit. ( so lower taxes ). We know the tax rate in US is high, so the US company sell at a low price to the sub, which becomes the cost for the sub.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[linkman311]

That makes much more sense, thanks!

Confidence is a prerequisite for success

FAR - 1/1
AUD - 1/1
BEC - 1/1
REG - Q4

Have Becker, wish I got Roger

[stoleway]

Financial risk management is a process that involves developing strategies to manage risk related to participating in financial markets. Assume that a credit union has been offering fixed-rate real estate mortgages to its members. Given conditions in financial markets, the credit union believes that it no longer can afford to offer this service and decides to begin offering variable-rate mortgages with the mortgage interest rate tied to an index and adjusted once a year. In terms of interest rate risk, the credit union has decided to ________ the risk.

A.

accept

B.

hedge

C.

transfer

D.

systematize

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[h0wdyus]

D. Systematize

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[stoleway]

Answer is transfer

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Author]

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