COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The characteristics or services transacted have identical characteristics under comparable conditions
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Characteristics or services that are transacted under conditions that are comparable and not identical
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The conditions of transactions conducted between related and independent parties are identical or have a high degree of comparability
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Conditions for transactions conducted between related parties and independent parties can be adjusted accurately to eliminate the effect of differences in conditions that arise
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Detailed explanation-1: -The CUP method compares the price for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction in comparable circumstances.
Detailed explanation-2: -What is the CUP method? The CUP method is a traditional transaction method. Traditional transaction methods are considered the most direct way of determining whether prices and conditions between associated enterprises are at arm’s length.
Detailed explanation-3: -The Comparable Uncontrolled Price “CUP” method compares the price charged for goods or services transferred in a controlled transaction with the price charged for goods or services in an uncontrolled transaction between comparable independent parties in similar circumstances.
Detailed explanation-4: -Comparable Uncontrolled Price (CUP) Method. Under the CUP method, a price that is charged in an uncontrolled transaction between the comparable firms is recognized and evaluated with a verified entity price for determining the Arm’s Length Price.