Which of the Following Is a Disadvantage of Pursuing a Transfer

question 77

Multiple Choice

Which of the following is a disadvantage of pursuing a transfer pricing policy?

• A) It is not useful in shifting earnings from a high-tax country to a low-tax one.
• B) Transfer pricing does not treat each subsidiary as a profit center.
• C) It is not effective when significant currency devaluation is expected.
• D) A transfer price policy cannot be used to move funds when dividends are restricted.

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Definitions:

Endergonic Reaction

A nonspontaneous reaction; a reaction requiring a net input of free energy. Compare with exergonic reaction.

Exergonic Reaction

A reaction characterized by a release of free energy. Also called spontaneous reaction. Compare with endergonic reaction.

Free Energy

The amount of internal energy within a system that is available to perform work, as in chemical reactions and physical processes.

Absorbs

The process of taking in or soaking up energy or material from the environment, such as light, heat, or moisture, through physical or chemical means.