COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The existence of contracts and invoices for services can prove the existence of a service provider
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Billing for service fees without a mark-up is certainly not fair
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If a service is not needed and does not benefit the recipient of the service, then the fair price is 0
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Service fee with 5% mark-up can be summed up as a fair price
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Detailed explanation-1: -Under ASC 820, fair value is based on the exit price (the price that would be received to sell an asset or paid to transfer a liability), not the transaction price or entry price (the price that was paid for the asset or that was received to assume the liability).
Detailed explanation-2: -Fair value accounting refers to the practice of measuring your business’s liabilities and assets at their current market value. In other words, “fair value” is the amount that an asset could be sold for (or that a liability could be settled for) that’s fair to both buyer and seller.
Detailed explanation-3: -Paragraph 17 (a) of IAS 27 requires to disclose the reason for preparing separate financial statements if not required by law. As the Companies Act mandates preparation of separate financial statements, paragraph 17 (a) has been modified to remove such requirement. 2.
Detailed explanation-4: -IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).