Which of the Following Statements About Transfer Pricing Is True

question 66

Multiple Choice

Which of the following statements about transfer pricing is true?

• A)The higher the transfer price,the larger the gross profits of the transferring division relative to the receiving division.
• B)Very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV)of that subsidiary's capital expenditure appear less attractive.
• C)Very low markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV)of that subsidiary's capital expenditure appear less attractive.
• D)The higher the transfer price,the larger the gross profits of the transferring division relative to the receiving division.In addition,very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV)of that subsidiary's capital expenditure appear less attractive.

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Definitions:

Inversion

The action of inverting something or the state of being inverted, such as turning the sole of the foot inward.

Eversion

The movement of turning a body part outward or inside out, often referred to in the context of ankle movements.

Temporomandibular Joint

The joint connecting the lower jaw (mandible) to the skull, allowing for movement and function of the jaw.

Tragus

A small, pointed cartilaginous flap located in front of the ear canal, often used as a landmark for various medical procedures.