Using the Comparable Profits Method of Transfer Pricing, the Transfer

question 51

Multiple Choice

Using the comparable profits method of transfer pricing, the transfer price is determined by:

• A) referring to an objective measure of profitability earned by uncontrolled taxpayers on comparable, uncontrolled sales.
• B) adding a standard profit margin to the operating expenses of the buying division.
• C) dividing a reasonable amount of profit between the selling and buying divisions.
• D) comparing the normal profits of the selling and buying divisions and basing the price on the highest margin.

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Definitions:

Eyewitness Accounts

Testimonies from individuals who have directly observed an event or situation.

Leading Questions

Questions phrased in a way that suggests a particular answer or influences the response of the person being asked.

Car Collisions

Incidents where two or more vehicles crash into each other.

Speed Estimates

Judgments about how fast an object or individual is moving, often relevant in eyewitness testimony and perception studies.