Transfer prices can be set arbitrarily because,as an internal transaction,there are no financial implications to charging transfer prices that are too high or too low.

Question

Quizplus · Accepted Answer

Transfer prices should not be set arbitrarily as they can impact the financial statements of the company, such as the profit and loss statement, balance sheet, and tax liabilities. If transfer prices are set too high, it can result in additional tax liabilities, while setting them too low can result in lower profits. Therefore, transfer prices should be set at fair market value to avoid any financial implications.

Transfer Prices Can Be Set Arbitrarily Because,as an Internal Transaction,there