COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Commercial database is the best source of comparative data that is acceptable to Taxpayers and Tax Authorities.
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When an internal comparator and an external comparator are found that both have a high degree of comparability, both comparators must be used.
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Companies that experience losses should not be used as comparison companies.
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Companies that have different products from the tested party can be used as a comparison.
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Detailed explanation-1: -An example would be two comparable distributors of consumer goods of the same industry segment, where the goods distributed may not be exactly the same, but the functional analyzes of the two distributors would be comparable.
Detailed explanation-2: -Comparability analysis is an essential step in any transfer pricing analysis in order to gain a correct understanding of the economically significant characteristics of the controlled transaction and of the respective roles of the parties to the controlled transaction.
Detailed explanation-3: -The comparability analysis is defined in the glossary of the OECD Guidelines as: “A comparison of a controlled transaction with an uncontrolled transaction or transactions.