A Transfer-Pricing Method Leads to Goal Congruence When ________

question 24

Multiple Choice

A transfer-pricing method leads to goal congruence when ________.

• A) there is a price difference in different markets due to market inefficiencies
• B) managers do no act for their own best interest and work for the long-term best interest of the manager's subunit
• C) managers act in their own best interest and the decision is in the long-term best interest of the company
• D) there is a low degree of centralization

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Definitions:

Depreciated

The reduction in the value of an asset over time due to wear and tear or obsolescence.

Ordinary Maintenance

Routine upkeep and repair of equipment and facilities to keep them in their original condition without significantly enhancing their value or extending their life.

Book Value

The net asset value of a company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Market Value

The existing rate at which an asset or service can be sold or acquired.