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To: Sam who wrote (563)	9/3/1998 3:57:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 3536

The transfer price of the goods coming through customs are used to calculate imports. So when Seagate brings in drives from their Singapore operation there is a price put on the value of the goods. This is done more for tax calculations that for trade but it works for both. Same with Toyota. If all the components are manufactured in the US then the car does not show up in the trade balance. Any profit made by Toyota USA stays as retained earnings in the US until it is dividended back to the parent at which point it appears in the capital account. Transactions between subsidiaries in different countries get priced and recorded as rigorously as if they were between unrelated companies. So the accounting for tax and reporting purposes is pretty straight forward.