International Accounting
International Accounting
5th Edition
ISBN: 9781259747984
Author: Doupnik, Timothy S., Finn, Mark T., Gotti, Giorgio
Publisher: Mcgraw-hill Education,
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Chapter 9, Problem 1Q
To determine

Determine the different types of intercompany transactions for which a transfer price needs to be set.

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Explanation of Solution

Intercompany Transactions:

Transactions between two related companies are known as intercompany transactions. For example, a subsidiary supplying raw material to its parent is an intercompany transaction.

The various types of intercompany transactions for which prices need to be determined are:

  • Sale of tangible property such as raw materials, finished goods, equipment and buildings.
  • Use of tangible property such as one company leasing land or building to another.
  • Use of intangible property such as patents, trademarks and copyrights
  • Intercompany services such as one company conducting market research for another related company.
  • Intercompany loans.

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What is Transfer Pricing for Small Businesses?; Author: Nomad Capitalist;https://www.youtube.com/watch?v=_Q6nN3s1Xjs;License: Standard Youtube License