The resale price method of transfer pricing requires a company to
A)understand the value added functions of each related party.
B)transfer at the full cost of the product plus a markup.
C)determine the market-based price.
D)calculate the arm's-length resale price.
E)calculate the return on assets.

Question

Quizplus · Accepted Answer

The resale price method of transfer pricing requires a company to calculate the arm's-length resale price, which is the price at which a related party will resell a product or service to an unrelated third party. This method is typically used when the related party is a distributor or reseller of the company's products. The arm's-length resale price is determined by analyzing comparable transactions in the open market.

The Resale Price Method of Transfer Pricing Requires a Company