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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Rutha

15 hours 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

7 days ago

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

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Ellen

8 days 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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