Which of the Following Is True of Profit Split Method

question 2

Multiple Choice

Which of the following is true of profit split method?

• A) It is based on the assumption that similarly situated taxpayers will tend to earn similar returns over a given period.
• B) Under this method, an arm's-length price is determined by referring to an objective measure of profitability earned by uncontrolled taxpayers on comparable, uncontrolled sales.
• C) This method assumes that the buyer and seller are one economic unit.
• D) This method is normally used in cases involving manufacturing, assembly, or other production of goods that are sold to related parties.

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Definitions:

Relatively Permanent

A term often used in the context of learning and memory, indicating changes in behavior or knowledge that are stable over time and not easily forgotten.

Sensory Stimuli

Environmental factors or changes that are detected by sensory organs, triggering responses or reactions in an organism.

Motivation

The inner force that drives individuals to accomplish personal and professional goals.

Law of Effect

A psychological principle stating that behaviors followed by pleasant consequences are likely to be repeated, while those followed by unpleasant consequences are less likely.