CIMA Exam CIMAPRO19-P02-1 Topic 8 Question 69 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 69
Topic #: 8

[All CIMAPRO19-P02-1 Questions]

Which of the following statements regarding multinational transfer pricing is INCORRECT?

ATransfer prices affect tax liabilities and royalties because of different laws in countries.

BIf transfer prices are inflated, this will increase profits of buying division.

CCompanies have incentives to set transfer price to increase revenues in low-tax countries.

DCompanies have incentives to set transfer price to increase costs in high-tax countries.

Show Suggested Answer

Suggested Answer: A, C, D

by Solange at Apr 21, 2023, 06:34 PM

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Galen

2 months ago

Wait, is this a trick question? I feel like they're trying to catch us out with these transfer pricing concepts. Better double-check my answers!

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Markus

12 days ago

C) Companies have incentives to set transfer price to increase revenues in low-tax countries.

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Kanisha

15 days ago

B) If transfer prices are inflated, this will increase profits of buying division.

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Carlton

1 months ago

A) Transfer prices affect tax liabilities and royalties because of different laws in countries.

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Rutha

2 months ago

Option A seems to be the incorrect statement. Transfer prices do affect tax liabilities and royalties due to different laws, so that one is actually correct.

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Elden

2 months ago

Haha, these transfer pricing questions are tricky. Gotta keep an eye out for those sneaky incorrect statements!

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Rosendo

1 days ago

B) If transfer prices are inflated, this will increase profits of buying division.

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Keneth

5 days ago

A) Transfer prices affect tax liabilities and royalties because of different laws in countries.

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Shalon

17 days ago

D) Companies have incentives to set transfer price to increase costs in high-tax countries.

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Tamar

1 months ago

C) Companies have incentives to set transfer price to increase revenues in low-tax countries.

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Adelaide

1 months ago

B) If transfer prices are inflated, this will increase profits of buying division.

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Emeline

1 months ago

A) Transfer prices affect tax liabilities and royalties because of different laws in countries.

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Ellen

2 months ago

I think option D is the right answer here. Companies do have incentives to set transfer prices to increase costs in high-tax countries to minimize their tax liabilities.

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