Transfer pricing exists when one division of a company produces a product that can be used in the production by a different division.

Question

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Transfer pricing refers to the practice of determining the value of goods or services exchanged between different divisions of the same company. It is used when one division produces a product that is used by another division, and the price for the product is determined through negotiation between the two parties. This is done to ensure that each division is operating on a basis of cost efficiency and profitability.

Transfer Pricing Exists When One Division of a Company Produces