ECONOMICS

COST ACCOUNTING

TRANSFER PRICING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
PT A in Indonesia, a tea plantation company, has very fertile, rare and good soil to produce the best tea leaves in the world. The tea leaves produced by PT A which have been packaged and given the brand name “Gan Tea" are sold entirely to affiliated companies C Co in Vietnam for sale and distribution to well-known restaurants around the world. The tea produced by PT A has long been widely used by luxury restaurants around the world because There is no doubt about the quality of the tea. If you are checking PT A, then the most appropriate TP method is:
A
Profit Split
B
TNMM dengan tested party PT A.
C
TNMM with tested party C Co.
D
Cost Plus dengan tested party PT A.
Explanation: 

Detailed explanation-1: -The tea plant grows well in deep and fertile well-drained laterite soil, rich in humus and organic matter, coupled with tropical and sub-tropical climates. Tea bushes require a moist and warm frost-free climate all through the year.

Detailed explanation-2: -Explanation : Plantations are a type of commercial farming where single crop of tea, coffee, sugarcane, cashew, rubber, banana or cotton are grown.

Detailed explanation-3: -Tea was introduced to Indonesia in the 1600s by Dutch colonists eager to replicate the success of English tea plantations in India. Although they initially experimented with varieties of Chinese tea, it was soon discovered that Assam teas from India are more suited to Indonesia’s hot, humid tropical clime.

There is 1 question to complete.