When a Cost-Based Transfer Price Is Used, the Transfer Price

question 92

Multiple Choice

When a cost-based transfer price is used, the transfer price may be based on any of the following except

• A) fixed cost alone.
• B) full cost.
• C) variable cost alone.
• D) All of these may be used.

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Definitions:

Journal Entry

A record in the accounting ledger that represents a transaction and its effect on accounts.

Fair Value

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Ordinary Repairs

Regular maintenance or repairs to keep property and equipment functioning efficiently without extending its life or increasing its value substantially.

Rental Property

Real estate property that is leased or rented out to tenants, generating income for the owner.