PT DEF is an Indonesian company that is part of the DEF Ltd business group, which conducts affiliated transactions with the financial year starting from January 1 to December 31. From PT DEFs financial reports, it is known that in the 2018 tax year, PT DEFs gross turnover was 49 billion rupiah. It is also known that in the 2018 tax year, there were royalty payments to affiliates with a value of 8 billion rupiah. In the 2019 fiscal year, are taxpayers required to organize and keep Transfer Pricing Documents?

TRANSFER PRICING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

PT DEF is an Indonesian company that is part of the DEF Ltd business group, which conducts affiliated transactions with the financial year starting from January 1 to December 31. From PT DEF’s financial reports, it is known that in the 2018 tax year, PT DEF’s gross turnover was 49 billion rupiah. It is also known that in the 2018 tax year, there were royalty payments to affiliates with a value of 8 billion rupiah. In the 2019 fiscal year, are taxpayers required to organize and keep Transfer Pricing Documents?

A	Yes, Taxpayers are required to organize and keep Transfer Pricing Documents
B	No, Taxpayers are not required to organize and keep Transfer Pricing Documents

Explanation:

Detailed explanation-1: -Equity accounting is an accounting method for recording investments in associated companies or entities. The equity method is applied when a company’s ownership interest in another company is valued at 20–50% of the stock in the investee.

Detailed explanation-2: -IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls.

Detailed explanation-3: -Answer and Explanation: The correct option is d. notes to the financial statements. The notes to the financial statements include the corporation’s accounting policies and methods and supporting notes for the balance sheet, income statement, cash flow statement, and statement of changes in equity.

Detailed explanation-4: -Since, the word ‘entity’ includes a company as well as any other form of entity, therefore, LLPs and partnership firms are required to be consolidated. Similarly, under Accounting Standard (AS) 21, as per the definition of subsidiary, an enterprise controlled by the parent is required to be consolidated.

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ECONOMICS

COST ACCOUNTING

TRANSFER PRICING