Which of the following statements about transfer pricing is/are true?
i. Income taxes and import duties are an important consideration when setting a transfer price for international companies.
ii. Transfer prices cannot be used by organisations in a service industry.
iii. Transfer prices are totally cost-based and not market-based.
A) i
B) ii
C) i and ii
D) All of the given answers

Question

Quizplus · Accepted Answer

Statement i is true as income taxes and import duties can affect the profitability of a company and thus it is important to consider them while setting transfer prices. Statement ii is false as transfer pricing can also be used in the service industry. Statement iii is false as transfer prices can be both cost-based and market-based, depending on the company's pricing strategy.

Which of the Following Statements About Transfer Pricing Is/are True