The USIRS Allows Transfer Prices to Be Set Using Comparable Uncontrolled

question 52

Multiple Choice

The U.S.IRS allows transfer prices to be set using comparable uncontrolled price method.This method requires

• A)finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
• B)the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to cover overhead costs and a reasonable profit.
• C)an appropriate profit is added to the cost of the manufacturing affiliate.
• D)financial models and econometric techniques.

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Definitions:

Cognitive Bias

A systematic pattern of deviation from norm or rationality in judgment, whereby conclusions about other people and situations may be drawn in an illogical fashion.

Performance of Divisions

Evaluation of each segment or department within a company based on their financial results, productivity, and efficiency.

Cognitive Bias

An organized tendency to deviate from normal or logical thinking in making judgments, leading to conclusions about people and situations that are drawn illogically.

Balanced Scorecard Framework

A strategic planning and management system used to align business activities with the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance.