Several transfer pricing policies are used in practice. Which transfer pricing policy is NOT used?
A) transfer at cost
B) transfer at zero cost
C) transfer at market price
D) transfer at negotiated price

Question

Quizplus · Accepted Answer

Transfer at zero cost is not used as it does not reflect the economic realities of the transactions between related parties. All other options (transfer at cost, transfer at market price, and transfer at negotiated price) are commonly used transfer pricing policies in practice. Transfer at cost is used for routine transactions, transfer at market price is used for transactions that can be compared to similar transactions between unrelated parties, and transfer at negotiated price is used for unique or complex transactions.

Several Transfer Pricing Policies Are Used in Practice