Already have an account? Get multiple benefits of using own account!
Login in your account..!
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Advantages of Transfer Pricing
(a) Transfer pricing is similar to cost apportionment and allocation in that values of one department are passed to another. For cost apportionment and allocation systems, costs of one department are passed to another with the objective of accumulating costs for product cost information purposes. In a sense, apportionment and allocation provides a mechanism of transfer pricing primarily based on input measures such as floor area or direct labor hours. Under transfer pricing arrangements, values of one department are also passed to another. Output measures of activities are used to charge departmental costs and allowable profits to other departments. The information produced can be used to accumulate product costs. Where transfer prices are cost based and make no allowance for profits, the results would differ from apportionment and allocation systems only with regard to the basis for transferring costs between departments.(b) Where performance measurement is linked to rewards such as promotion or salary, the method of transfer price can have a direct impact on the motivation of the divisional manager. For example, a divisional manager appraised on a profit centre basis will be in a position of advantage where high transfer prices are established for the particular division. The effect of motivating managers to improve profits may lead to bargaining for transfer pricing methods which provide the highest transfer prices for their particular divisions. In a transfer pricing situation, as in a number of accounting situations, there will inevitably be winners and losers. The challenge to the accountant is to devise a transfer pricing methodology which ensures that the winners are those who will benefit the organization most in the long term.(c) Some multinational companies are in a position to use transfer pricing to reduce total taxation costs. This can be achieved by establishing transfer prices towards the higher end of the spectrum of allowable values in countries with low taxation. This would tend to lead to high profits in countries with low taxation and lower profits in countries with higher taxation. Governments in some countries take steps from time to time to regulate the operation of transfer pricing systems for this reason.
A managerial accounting strategy focusing mainly on maintaining efficient levels of both components of working capital that is current assets and current liabilities, with respect
the applicability of standard costing in modern manufacturing environments in volatile environments
distinguish between cost unit and cost centre
Explain Activities uses through activities based costing In order to correctly associate costs with products and services. ABC assigns cost to activities based on their use of
A bill is explained as an unconditional order in writing, addressed through one person to the other, signed through the person providing it, requiring the person to whom it is addr
How to write introduction on strategy plan
What are the Objectives of Intra company transfer pricing The objectives of Intra company transfer pricing are: 1) Evolution of performance and efficiency of each division.
Classification of ratio according to significance The ratios have also been classified according to their significance. Some ratios are more important than other and the fir
Improvement in product design may result in cost reduction illustrated below: 1) Material cost : change in design of the product may result in saving in material cost. Economi
Hi there, i am looking an expert to make my assignments for this subject and i do have other subjects as well. Let me know how you can go through my assignment.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd