ECONOMICS

Detailed explanation-1: -Intersegment sales are the transfer or exchange of goods for monetary compensation between one segment of a company to another segment within the same company. Companies with different divisions and business operations commonly experience intersegment sales.

Detailed explanation-2: -A transfer price is the internal price charged by one segment of a firm for a product or service supplied to another segment of the same firm. Why does it matter? Transfer pricing not only determines how the pie (total profit) is divided among responsibility centers.

Detailed explanation-3: -In accounting, intercompany transfer pricing is the price charged for goods or services exchanged between companies within the same group of companies. The purpose of transfer pricing is to ensure that each company in a group contributes fairly to the overall profitability of the group.

Detailed explanation-4: -Multinational corporations use transfer pricing as a method of allocating profits (earnings before interest and taxes) among their various subsidiaries within the organization.

Detailed explanation-5: -Transfer pricing is an accounting practice that represents the price that one division in a company charges another division for goods and services provided.