Several transfer pricing policies are used in practice.These transfer pricing policies include market price, cost-based transfer prices, and negotiated transfer prices.

Question

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This statement is true. These three transfer pricing policies are commonly used in practice. Market price refers to the price of a good or service that is available in an open market. Cost-based transfer prices involve determining the cost of producing a good or service and adding a markup. Negotiated transfer prices involve setting a price through negotiation between the two parties involved in the transfer.

Several Transfer Pricing Policies Are Used in Practice