The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the
A) cost-based approach.
B) market-based approach.
C) negotiated price approach.
D) time-and-material pricing approach.

Question

Quizplus · Accepted Answer

The market-based approach is considered the best approach for transfer pricing because it reflects the true market value of goods or services being transferred between entities. This provides the proper economic incentives for each entity to make decisions that optimize overall profits for the company as a whole.

The Transfer Price Approach That Is Often Considered the Best