Basing transfer prices on artificially low distress market prices could lead the producing division to sell or close the productive resources devoted to producing the product for transfer.

Question

Quizplus · Accepted Answer

Using artificially low distress market prices for transfer pricing can make the producing division appear less profitable than it actually is, potentially leading to decisions to sell or close productive resources due to perceived underperformance.

Basing Transfer Prices on Artificially Low Distress Market Prices Could