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Which of the following is an example of transfer pricing? (A) The price charged by a company for a good or service provided to its subsidiaries (B) A company selling its product at a minimum price to undercut a global competitor (C) A company transferring the right to use its intellectual property to another company (D) The profits gained from pricing by a company affected by international currency fluctuations - HSC - SSCE Business Studies - Question 10 - 2002 - Paper 1
Question 10
Which of the following is an example of transfer pricing? (A) The price charged by a company for a good or service provided to its subsidiaries (B) A company selling... show full transcript
Worked Solution & Example Answer:Which of the following is an example of transfer pricing? (A) The price charged by a company for a good or service provided to its subsidiaries (B) A company selling its product at a minimum price to undercut a global competitor (C) A company transferring the right to use its intellectual property to another company (D) The profits gained from pricing by a company affected by international currency fluctuations - HSC - SSCE Business Studies - Question 10 - 2002 - Paper 1
Step 1
Identify the correct example of transfer pricing
Answer
The correct answer is (A) The price charged by a company for a good or service provided to its subsidiaries. Transfer pricing refers to the method by which related parties, such as a parent company and its subsidiaries, set prices for the goods and services sold between them.