Explore BrainMass

Explore BrainMass

    Various approaches to setting transfer prices

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What are the main approaches for setting transfer prices? How can the problems that these approaches create be reconciled between the selling and buying divisions?

    © BrainMass Inc. brainmass.com June 4, 2020, 3:53 am ad1c9bdddf
    https://brainmass.com/business/accounting/various-approaches-setting-transfer-prices-541182

    Solution Preview

    Transfer prices are set usually based on performance policy (what gets rewarded) or tax minimization (shifting profits to low tax areas). The approaches generally include:

    At Cost - this keeps all profits in transaction with outside parties at market rates and doesn't require any elimination of intra-company profits during financial statement ...

    Solution Summary

    Your tutorial is 188 words and a reference and discusses three major approaches, cost, negotiated and market.

    $2.19

    ADVERTISEMENT