Which of the Following Is True About the Transfer Pricing

question 30

Multiple Choice

Which of the following is true about the transfer pricing methods of determining an arm's-length price?

• A) The arm's-length standard is only applicable for commodities businesses.
• B) The resale method is most applicable for transfers of components or unfinished goods to overseas subsidiaries.
• C) The cost-plus approach usually applies best to transfers to sales subsidiaries for ultimate distribution.
• D) The starting point for testing the appropriateness of transfer prices is a comparison with comparable uncontrolled transactions involving unrelated parties.

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Definitions:

Convey

To communicate or make known something, typically information or feelings.

Supposed

Generally considered or believed to be the case, often without much definite proof.

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Engaging in imaginative play, where children enact roles or stories using objects or themselves as characters.

Cope

The ability to deal effectively with something difficult or challenging.