When setting transfer prices among international subsidiaries, the corporation must:
A) make sure that the total tax is minimized.
B) ensure that the transfer prices are acceptable to the taxing authorities in the countries involved.
C) do whatever it takes to make taxes paid in the United States as low as possible.
D) follow the transfer pricing policy used for domestic transfers.

Question

Quizplus · Accepted Answer

When setting transfer prices among international subsidiaries, corporations must ensure that the transfer prices are acceptable to the taxing authorities in the countries involved. This helps to avoid any potential disputes over transfer pricing and can also protect the company from potential penalties or fines. While minimizing taxes is a consideration, it should not be the sole focus when setting transfer prices. The transfer pricing policy used for domestic transfers may not be applicable in an international context due to differing tax laws and regulations.

When Setting Transfer Prices Among International Subsidiaries, the Corporation Must