Chapter 5
Chapter 5
Transfer Pricing
Objectives
Methods
•
•
•
•
•
Fundamental Principle
The Ideal Situation
Constraints on Sourcing
Cost-Based Transfer Prices
Upstream Fixed Cost and Profits
Pricing Corporate Services
• Control over amount of services
• Optional use of services
• Simplicity of the Price Mechanism
Administration of Transfer Prices
• Negotiation
• Arbitration and Conflict Resolution
• Product Classification
Transfer Pricing
Objectives
Methods
•
•
•
•
•
Fundamental Principle
The Ideal Situation
Constraints on Sourcing
Cost-Based Transfer Prices
Upstream Fixed Cost and Profits
Pricing Corporate Services
• Control over amount of services
• Optional use of services
• Simplicity of the Price Mechanism
Administration of Transfer Prices
• Negotiation
• Arbitration and Conflict Resolution
• Product Classification