Which of the following statements about transfer pricing is true?
A) the higher the transfer price, the larger the gross profits of the transferring division relative to the receiving division
B) very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV) of that subsidiary's capital expenditure appear less attractive
C) very low markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV) of that subsidiary's capital expenditure appear less attractive
D) a and b
Correct Answer:
Verified
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