A Canadian company has subsidiaries in France, England, Canada, and in the USA.The company is somewhat vertically-integrated in that the Canadian subsidiary sells some of its output to the USA subsidiary.Which further processes the material.If the market is fully-competitive, which transfer price would likely be used, given Canada Revenue Agency's published policy on transfer pricing?

Question

Quizplus · Accepted Answer

According to Canada Revenue Agency's published policy on transfer pricing, a market-based price is preferred for transactions between related parties. This means that the transfer price would be based on the prevailing market price for the product, rather than full cost plus a markup or a negotiated price. Additionally, the fact that the company operates in a fully-competitive market further supports the use of a market-based price.

A Canadian Company Has Subsidiaries in France, England, Canada, and in the USA.The