transfer price

If the divisions trade with each other transfer prices will have to be agreed.

This article has looked at how a theoretical transfer price can be calculated in a simple situation.

Now we get to the true transfer pricing problem.

It is normal for a transfer price to be imposed and then to let the divisions get on with making their own decisions.

I also showed how to arrive at a successful transfer price where there was no market for the intermediate product.

Look at Figure 3 again; the transfer price could be one that is set equal to the market price.

Transfer pricing relates to which jurisdiction a company is paying tax.

The practice, known as transfer pricing, is one way oil and gas companies avoid paying higher federal taxes, he added.

Multi-nationals can use their market power to fiddle transfer prices.

As a hypothetical example of transfer pricing issues, consider a company with two subsidiaries.

Transfer prices are those charged within families of companies for goods, services or intangibles.

A company can easily manipulate its cost accounts to alter the magnitude of the transfer price.

We created profit centres and developed a transfer pricing system.

In response, the Administration pointed to the elimination of administrative transfer pricing rules.

Most other Russian companies have stopped transfer pricing altogether.

This loan was extended for the 2010 season after the clubs couldn't agree a transfer price.

Transfer pricing might be one reason for this.

As goods are passed up to a division, the transfer price may include elements to cover profit and fixed costs.

As each transfer price embodies just the sum of variable costs so far, this method is good for decision making.

Most sophisticated tax codes now prevent transfer pricing schemes of this nature.

In such a case, the transfer price is deemed to be the reasonable amount determined on an arm's length basis.

Big companies choose transfer pricing and finding of a home for their capital as options enabling them to avoid tax.

If transfer prices are set high enough then, as a division sells goods to other divisions, it will be able to make profits.

Theoretical transfer pricing is all very well, but in practice not many companies will know their marginal cost and revenue functions.

Not all practical methods of transfer pricing will meet these aims at the same time and compromises may have to be made.