When There Is No Intermediate Market

question 17

Multiple Choice

When there is no intermediate market:

• A) there is no optimal transfer price.
• B) the selling division cannot transfer its goods internally.
• C) the buying division cannot purchase its goods externally.
• D) there is no reason for top management to intervene in transfer pricing disputes.

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Definitions:

Standard Setters

Organizations or bodies responsible for establishing norms and guidelines in various fields, such as accounting or industry standards.

Historical Cost

Historical cost is an accounting principle that records assets and transactions at their original purchase price, without adjusting for inflation or market changes.

Representationally Faithful

An attribute of financial information that suggests the data accurately reflects the economic transactions and events it purports to represent.

Faithful Representation

A qualitative characteristic of financial information that ensures all figures are complete, neutral, and free from material error.