Company A purchases its supplies directly from a foreign company. Because of the distance between the two companies, this transaction is considered an arm's-length transaction.

Question

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An arm's-length transaction refers to a deal made by two parties who act independently and have no relationship to each other, ensuring that both parties act in their own self-interest. The distance between companies does not determine if a transaction is arm's-length.

Company a Purchases Its Supplies Directly from a Foreign Company