Asked by Vincent Zhang on Jul 11, 2024
Verified
Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the
A) cost price approach
B) negotiated price approach
C) revenue price approach
D) market price approach
Transfer Price
The price at which goods and services are transferred between departments or subsidiaries of the same company, often used for accounting and tax purposes.
Market Price Approach
A valuation method that estimates the price of an asset based on the current market prices of similar assets.
- Acquire knowledge on the subject of transfer pricing and explore its different approaches.
Verified Answer
VV
Violet VetterJul 13, 2024
Final Answer :
D
Explanation :
The market price approach determines the transfer price based on the price at which the product or service could be sold to outside buyers, ensuring that it reflects the current market conditions and is fair to both the selling and buying divisions. The other options are not as effective or efficient in determining a fair transfer price.
Learning Objectives
- Acquire knowledge on the subject of transfer pricing and explore its different approaches.
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