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:

Intangible Asset

An asset that lacks physical substance, such as patents, trademarks, goodwill, and copyrights, which can nonetheless provide economic benefits.

Oil Well

A drilling operation focused on extracting petroleum or natural gas from underground reservoirs, usually involving significant exploration and investment.

Goodwill

The excess of the purchase price over the fair value of identifiable assets and liabilities acquired in a business combination.

Excess Cost

This refers to the additional amount paid over the book value of an asset in a purchase consideration.