The Following Questions Pertain to the Process of Transfer Pricing

question 45

Essay

The following questions pertain to the process of transfer pricing.
Required:
1. Define the term transfer price.
2. What are the three general alternatives for setting domestic transfer prices?
3. What is meant by the term dual pricing, as used within the context of the transfer pricing decision? Give one example of dual pricing.
4. What criteria can be used to judge a particular transfer pricing alternative? (Hint: think about the different objectives of transfer pricing, including objectives in an international setting.)
5. What is meant by the term "advance pricing agreement" (APA)? What is the essential purpose of an APA?

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Definitions:

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