COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Transactional net profit (Transactional Net Margin Method)
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Biaya-plus (Cost Plus Method)
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Resale price (Resale Price Method)
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Comparison of independent transactions (Comparable Uncontrolled Transaction)
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Detailed explanation-1: -The resale price method (RPM) is a transfer pricing method based on the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise. The resale price is reduced by the resale price margin.
Detailed explanation-2: -The market-based transfer price is the market price of an item in an uncontrolled market. Market-based transfer prices are used when there are no comparable market transactions involving the transfer of ownership for goods or services, which means that specific identification cannot be applied.
Detailed explanation-3: -TNMM is the most broadly applicable transfer pricing methodology and commonly used due to its fairly easy implementation which only requires financial data. Below is the illustration of TNMM. “Company E is a Philippine subsidiary of a US business process outsourcing (BPO) company.