Indicate Whether Each of the Following Statements About Transfer Pricing

question 82

Short Answer

Indicate whether each of the following statements about transfer pricing is true or false.
A cost-based transfer price has the advantage of promoting efficiency and fairness.______
A market-based transfer price may be adjusted to take into account cost savings that occur as a result of sales being made within the company.______
A decentralized company should adopt a policy of requiring divisions in the company to make sales to other divisions when such sales will benefit the company as a whole.______
The level of capacity at which the selling division is operating should not affect the level of the transfer price for a sale to another division in the same company.______
Companies with operations in two or more countries sometimes try to set transfer prices at a level that will reduce their overall income tax bill.______

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Definitions:

Estimate of Value

An approximation of something's worth, determined through analysis or professional appraisal techniques.

Nondisclosure

The act of withholding information or not communicating certain information, often to protect confidentiality or trade secrets.

Misrepresentation

Providing false or misleading statements that induce someone into a contract that they would not have entered had they known the truth.

Silence

The absence of expressed stipulations or disclosures, which in certain legal contexts, may imply consent or acquiescence.