COST ACCOUNTING
TRANSFER PRICING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which method is the weakest but easiest to do?
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CUP
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Resale Price
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Cost Plus
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TNMM
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Explanation:
Detailed explanation-1: -The TNMM applies in a manner similar to RPM and CPM, and therefore must be applied in a manner consistent with the manner in which RPM or CPM is applied – the only difference is that TNMM examines net profit, while RMP and CPM examine gross profit.
Detailed explanation-2: -Pros: The TNMM’s relatively relaxed comparability requirements make it one of the most widely used transfer pricing methods. Net-profit data is often publicly available, and the TNMM is less sensitive to minor differences between comparable transactions.
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