When is the negotiated price approach preferred over the market price approach in setting transfer prices? When is the negotiated price approach preferred over the market

Q: Whether the firm uses the​ market-based approach or the​ cost-based approach for pricing​ decisions,…

A: Introduction: Market based approach: For calculating the selling price of Asset firm uses market…

Q: Explain and critically assess the general idea behind transfer pricing. Would it be beneficial for…

A: The objective of this question is to understand the concept of transfer pricing, its benefits, and…

Q: Why does Sales discounts are variable consideration?

A: Variable considerations: Variable consideration refers to the amount that the corporation is…

Q: What are joint costs? How do they affect the sell or process further decision?

A:

Q: What is the Joint Hypothesis and what are its implications for tests of asset pricing models?

A: The Capital Asset Pricing Model (CAPM) is a model that explains the relationship between expected…

Q: In a transfer pricing decision, which of the following factors should be considered?    Both A and B…

A: Transfer pricing refers to the pricing strategy and decisions made within transnational companies…

Q: Explain the effect of issuance cost on firm value.

A: There are issues cost associated with debt and equity that has impact on  value of firm.

Q: State the difference between secondary market and primary market.

A: Financial Markets refer to the place where financial assets or securities are being created,…

Q: What is meant by actuarially fair prices? What conditions will make Arrow-Debreu prices actuarially…

A: Fairtrade Minimum Price is defined as the minimum price, which used to get paid through the…

Q: Why might purchasing power parity fail to hold?

A: It refers to the relationship which indicates the same cost and same kinds of products in the market…

Q: What is a market order? What is a limit ordrer?  how are each executed?

A: Market order is a type of instructions in the stock market to purchase or sell the securities…

Q: What is market multiple method?

A: The market multiple methods is a hypothesis of valuation, in view of the reason that comparative…

Q: Explain how the lower of cost and net realizable value rule is applied to purchase commitments.

A: Purchase Commitments: It refers to the commitments or contract made by a company with its suppliers…

Q: Why are secondary market prices relevant for a firm

A: Secondary market can be defined as the market where securities which have been already issued in the…

Q: When should special pricing orders be accepted?

A: Special pricing order: A special order is a unique one time order made by a customer. In this order…

Q: What is meant by the terms clean price and dirty price?

A: Clean price: The clean price is the price of a coupon bond does not comprise any accumulated…

Q: Explain with examples these methods of transfer pricing Comparable Uncontrolled Price Method •Cost…

A: Comparable Uncontrolled Price (CUP) Method: The Comparable Uncontrolled Price (CUP) Method is a…

Q: Differentiate primary markets from secondary markets?

A: Financial Markets refers to the place where financial assets or securities  are being created ,…

Q: What questions should managers answer when considering special pricing orders?

A: Definition:   Special Pricing: When businesses get Special orders from its customers for bulk…

Q: Describe the difference between the forward price and the value of a forward contract?

A: First, let us define a forward contract. Forward contracts are agreements between two parties to buy…

Q: Arbitrage Pricing Theory a. Explain the Concepts "Law of one Price" and "Opportunity Cost"

A: Law of One Price: The One Price Rule is an economic principle that proposes that equal products…

Q: What are the differences among a stop-loss order, a limit sell order, and a market order?

A: A stop-loss order: A stop-loss order is a tool used by traders and investors to limit losses and…

Q: What is mark-to-market?

A: Market to market is an equipment that can become different the value on either side of balance…

Q: Is the “forward price” the same thing as the “value of the forward contract” Explain.

A: Derivative is defined as the contract, which are between the two or more parties, who has the value…

Q: Explain and critically assess the general idea behind transfer pricing. Would it be beneficial for…

A: The objective of this question is to understand the concept of transfer pricing, its benefits, and…

Q: Which of the following transfer price approaches is used when the transfer price is set at the…

A: Transfer Price  : Price at which related parties transact with each other is known as transfer…

Q: Distinguish between par value and issue price.

A: Solution: Par value is a value assigned to a financial instrument issued by the company. It is…

Q: What is market multiple analysis?

A: Answer: Market multiple analysis: A multiple analysis of market is a form of financial modelling to…

Q: How should managers consider income tax issues when choosing a transfer-pricing method?

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Q: Explain one advantage and one disadvantage of the following transfer pricing methods: Cost Market…

A: first let us understand each of these methods briefly: Cost Method - Under this method goods are…