IIA Exam IIA-ACCA Topic 1 Question 79 Discussion

Actual exam question for IIA's IIA-ACCA exam

Question #: 79
Topic #: 1

In which of the following scenarios would transfer pricing be used?

ACompany A owns Company B; Company B sells goods to Company A.

BCompany A does not own Company B. Company A charges Company B a fee to sell Company B's goods without taking ownership of the goods.

CCompany A owns both Company B and Company C; all three companies sell goods to the public.

DCompany A moves goods internally from one location to another.

Show Suggested Answer

Suggested Answer: B

by Dan at Jun 21, 2024, 04:45 AM

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Matthew

6 days ago

Ha! I bet the answer is C. When you have a whole corporate family, transfer pricing becomes a necessary evil to keep the finances straight.

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Shalon

7 days ago

I'm torn between A and D. Transfer pricing is often used for internal movements of goods too, not just between separate entities.

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Justine

1 months ago

Option A seems the most likely scenario for transfer pricing. When a company owns another, they would use transfer pricing to manage the flow of goods between the two entities.

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Jovita

4 days ago

A) Company A owns Company B; Company B sells goods to Company A.

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Percy

1 months ago

I disagree. I believe transfer pricing would also be used in scenario D, when goods are moved internally within the same company.

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Franchesca

1 months ago

I agree with Tora. In scenario A, there is a related party transaction which requires transfer pricing to determine fair market value.

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Tora

2 months ago

I think transfer pricing would be used in scenario A.

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