When a Transfer Price Is Set by the Management of a Parent

question 39

Multiple Choice

When a transfer price is set by the management of a parent company rather than by the subsidiary managers,what kind of transfer price is being used?

• A)market-based transfer price
• B)negotiated transfer price
• C)discretionary transfer price
• D)cost-based transfer price

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Definitions:

Seed-tree Cutting

A forestry technique where select seed-bearing trees are left standing to regenerate a forest.

Second-growth Forest

A forest that has regrown after a major disturbance, such as logging or fire, and is characterized by younger trees.

Tree Plantation

A forested area where trees are deliberately planted or sown for commercial, environmental, or agricultural purposes.

Farming Area

Land designated and utilized for agricultural purposes to cultivate crops and rear animals for food and other products.