Transfer pricing is primarily incurred in
A)foreign corporations exporting their products.
B)decentralized organizations.
C)multinational corporations headquartered in the U.S.
D)closely held corporations.

Question

Quizplus · Accepted Answer

Transfer pricing is most commonly associated with decentralized organizations that have multiple divisions or subsidiaries in different countries, as they may transfer goods or services between these entities at artificially high or low prices for tax or other financial benefits. While multinational corporations headquartered in the U.S. may also engage in transfer pricing, it is not exclusive to them. Transfer pricing is less relevant for closely held corporations as they are less likely to have multiple entities in different countries. Foreign corporations exporting their products may also engage in transfer pricing, but it is not the primary context in which transfer pricing arises.

Transfer Pricing Is Primarily Incurred in