wha is transfer pricing?explain with example the technique of transfer pricing ?
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Transfer pricing is the setting of the price for goods/services that are sold between related/controlled legal entities within an organisation. For example, if a subsidiary firm sells goods to its parent firm, the cost of those goods paid by the parent firm to the subsidiary firm is the transfer price.
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In taxation and accounting, transfer pricing refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control.
In practice, the TNMM is the most used of all five transfer pricing methods, followed by the CUP method and Profit Split method. Cost Plus Method and Resale Margin Method are barely used.
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