Transfer Pricing - 2696 Words

Transfer Pricing An Overview Transfer pricing is a popular topic in management accounting. It is concerned with the price when one department (the selling department) provides goods or services to another department (the buying department). That is, one department generates revenue from the sales of goods or services and the other department incurs expenses from the purchases of goods or services. Transfer pricing is closely related to responsibility accounting in which each department is responsible for its cost, revenue, expense or investment return depending on the type of centre it is. Thus, transfer pricing effectiveness is essential to the success of the overall company. The related key issue is the determination of a transfer†¦show more content†¦Consequently, the determining factor is whether the buying division is willing to pay the market price. If the buying division is willing to do so, the implication is that the buying division can generate incremental profits for the company by purchasing the product from the selling division and either reselling it or using the product in its own production process. On the other hand, if the buying division is unwilling to pay the market price, the implication is that corporate profits are maximized when the selling division sells the product on the external market, even if this leaves the buying division idle. Sometimes, there are cost savings on internal transfers compared with external sales. These savings might arise, for example, because the selling division can avoid a customer credit check and collection efforts, and the buying division might avoid inspection procedures in the receiving department. Market-based transfer pricing continues to align managerial incentives with corporate goals, even in the presence of these cost savings, if appropriate adjustments are made to the transfer price (i.e., the market-based transfer price should be reduced by these cost savings). However, many intermediate products do not have readily-available market prices. Examples are: a pharmaceutical company with a drug under patent protection (an effective monopoly); and an appliance company that makes component parts in the Parts Division and transfers those parts toShow MoreRelatedTransfer Pricing20501 Words   |  83 PagesTransfer Pricing in Developing Countries An Introduction Topics 1. Abstract 2. International tax law its sources 3. Brief history of International Tax Law 4. Who gets the pie? 5. Arm s length principle : Cornerstone of International Tax Law 6. Transfer pricing methods 7. Problems with of source taxation of MNE s 8. Internet e-commerce : Achilles heel of current International taxation regime? 9. Formulary Apportionment (FA) 10. Existing uses of Formulary Apportionment systems in the worldRead MoreThe Us Transfer Pricing Regulations951 Words   |  4 PagesDiscuss the US transfer pricing regulations, including advances pricing agreements, arms length standard, and methods allowed to determine comparable prices. - 60 The US transfer pricing regulations, as outlined in Section 482 of the Internal Revenue Code, are similar to the Organization for Economic Co-operation and Development (OECD) guidelines. They have a commitment to the arm s length principle, as do many other countries worldwide who use it as a basis for bilateral treaties between governmentsRead MoreThe Importance of Transfer Pricing Essays5372 Words   |  22 PagesInternational Transfer Pricing | Country Case: Argentina | | | | International Accounting – ACG6255 Professor Robert McGee Philip Archer | Table of Contents 1. Abstract 2. Transfer Pricing Overview 3. Defining Transfer Prices 4. Arm’s Length Principle 5. Pricing Methods 6.1. Comparable Uncontrolled Price Method (CUP) 6.2. Comparable Uncontrolled Transaction Method 6.3. Resale Price Method (RPM) 6.4. Cost-Plus Pricing Method (CPM) Read MoreGlobalization and Transfer Pricing Essay1882 Words   |  8 PagesMartens 2003). When discussing globalisation, the topic transfer pricing always seem to arise which could be because this multi-nationals trade between themselves and the government also uses transfer pricing. Therefore transfer pricing is used wold wide and could be said to be an important accounting factor which enables the success of a firm due to the fact its set up to induce optimal decision making in decentralized firms. Transfer pricing could be defined when a company trades goods/servicesRead MoreTransfer Pricing Is An Internal Practice2773 Words   |  12 PagesTransfer pricing is an internal practice within an MNE and thus it is insulated against the open market forces of demand and supply. In competitive open markets, the forces of demand and supply would interact to determine the price at which goods and services are transferred. While these forces could have an impact on transfer pricing from a macro perspective, their impact on intra-group pricing can be limited. Larry J. Merville and J. William Perry (1978) identified the various items that affectRead MoreContinuing My Studies and Specializing in Transfer Pricing543 Words   |  2 Pagesof life and encourages to deeply develop the knowledge, in particular in the area of Transfer Pricing. This corresponds with my future objective to be an expert in Transfer Pricing. Nowadays, Transfer Pricing has been the most issue in International Taxation area. The activity of Multinational Enterprises (MNEs) which represents a growing proportion of international trade may significantly lead to Transfer Pricing practice, in particular within intra-group transaction where income can be shiftedRead MoreCase study on birch paper company with regard to transfer pricing.1102 Words   |  5 Pagesabove, Northern should accept the bid from Thompson division as it has the lowest cost if all transfer prices within the company were calculated at costs. Incurring the lowest costs would also enable Birch Paper Company to earn the highest profits possible. 2. As alternatives for sourcing exists, Mr. Kenton should be permitted to choose the alternative that is in Northern divisions own interests. The transfer price policy gives him the right to deal with either insiders or outsiders at his discretionRead MoreTransfer Pricing--Market-Based vs. Cost-Based2656 Words   |  11 PagesIntroduction Transfer pricing is one of the key factors of a management control system, which helps a company to achieve its goals, including profit maximization and tax minimization. There are several methods of setting transfer prices among profit centers within the same organization. Each profit center tries to set transfer prices which maximize their own profit. The buying and selling profit centers’ profits are largely affected by transfer prices. For example, when a high transfer price is chargedRead MoreMANAGEMENT CONTROL SYSTEMS, TRANSFER PRICING, AND MULTINATIONAL CONSIDERATIONS4428 Words   |  18 Pages CHAPTER 22 MANAGEMENT CONTROL SYSTEMS, TRANSFER PRICING, AND MULTINATIONAL CONSIDERATIONS LEARNING OBJECTIVES 1. Describe a management control system and its three key properties 2. Describe the benefits and costs of decentralization 3. Explain transfer prices and four criteria used to evaluate them 4. Calculate transfer prices using three different methods 5. Illustrate how market-based transfer prices promote goal congruence in perfectly competitive markets 6. Avoid makingRead MoreResponsibility Accounting Transfer Pricing - Shuman Automobiles, Inc1577 Words   |  7 PagesResponsibility Accounting Transfer Pricing - Shuman Automobiles, Inc Facts of the Case: 1. Clark Shuman, owner and general manager, plans to retire and relinquished his control over the company 2. Business has been doing good with an emphasis of selling new cars as the principal business of the dealership 3. He created three independent departments, namely new car sales, used car sales, and service department. 4. Salary is dependent on each departments gross profit 5. Upon the take over

To Pimp A Butterfly(2015) by Kendrick Lamar free essay sample

Kendrick Lamar is a rap artist that has made some masterful albums like the famous Good Kid M.A.A.D. City and so far has only really three albums from what I know of. When compared to other rappers like Drake or Eminem, he often stands superior. Falling under the subgenre of Gangster or Western Rap and often talks about some sort of political turmoil or society based with his lyrics which I find is relatively uncommon in any form of music, especially heavy metal. To Pimp A Butterfly its self could be like a metaphor for paying attention to something we dont often notice like, well, a butterfly. Butterfly is generally a metaphor for the world around us in terms of politics, or at least thats how I was told and thought of it. But now for the music its self. The music includes anything from general sampled beats to jazz styled background tunes and even in the track For Free? a short jazz solo. We will write a custom essay sample on To Pimp A Butterfly(2015) by Kendrick Lamar or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This could possibly be in the spirit of his concept album Good Kid M.A.A.D. City because it shares some of the same themes and ideas from that album including mentioning the M.A.A.D City line at least a couple times throughout the album. In tracks like King Kunta, i, u, These Walls(not to be confused with Dream Theater), and the epic 12 minute song Mortal Man, he seems to touch upon many of these topics like a boss(sorry had to do that) and gives his viewpoint in lyric form. Generally he would think that some things are in need of fixing at least and he even mentions topics like inequallity and racism I believe which I swear needs to be fixed or at least toned down. His lyrical flow also works almost all the time and he also has many other guest stars and even his producer into the mix as well. Mortal Man consists of mostly the conversation between Kendrick and his producer talking about what they think the world is like in their eyes and what they think is wrong but is often done i n society anyways. That plus a very soft almost pianoissemo level possibly more quiet to at least make it not seem like a total drag. Bar none, my favorite track here is King Kunta. I Dont know why its probably just catchy. My least favorite comes right before it I believe being For Free? though its probably due to the lyrics themselves. I gotta say, everyone seems to like this album upon maybe a couple listens. It took me a little while(clearly, because Im very late)but Id have to agree with them here. I give this an 8.9/10. I am the Grim Reaper, signing off.