If the divisions exchanging goods are located in different countries with different tax rate structures, the key determinant of transfer prices could be based largely on:

Question

Quizplus · Accepted Answer

If the divisions exchanging goods are located in different countries with different tax rate structures, the key determinant of transfer prices would likely be based on a tax minimization strategy. This involves setting transfer prices at levels that result in the most tax-efficient outcome for the company, which may involve setting prices below market prices or above variable costs. Therefore, choice D is the best answer.

If the Divisions Exchanging Goods Are Located in Different Countries