The USIRS Allows Transfer Prices to Be Set Using the Cost

question 68

Multiple Choice

The U.S.IRS allows transfer prices to be set using the cost plus approach

• 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:

General Description

A broad or overall outline of an object, situation, or set of conditions, often providing basic details without going into in-depth specifics.

Trade Custom

Established practices or patterns of behavior that are widely accepted and followed within a particular industry.

Implied Warranty

A legal assumption that a product will meet certain standards of quality and reliability without being explicitly stated.

Contract

A legally binding agreement between two or more parties that outlines obligations and rights.