CIMA Exam CIMAPRO19-P02-1 Topic 8 Question 69 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 69
Topic #: 8

[All CIMAPRO19-P02-1 Questions]

Which of the following statements regarding multinational transfer pricing is INCORRECT?

ATransfer prices affect tax liabilities and royalties because of different laws in countries.

BIf transfer prices are inflated, this will increase profits of buying division.

CCompanies have incentives to set transfer price to increase revenues in low-tax countries.

DCompanies have incentives to set transfer price to increase costs in high-tax countries.

Show Suggested Answer

Suggested Answer: A, C, D

by Solange at Apr 21, 2023, 06:34 PM

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6 days ago

Option B is incorrect. If transfer prices are inflated, this will actually decrease profits of the buying division, not increase them.

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9 days ago

Why do you think that?

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10 days ago

I disagree, I believe the answer is C.

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17 days ago

I think the answer is D.

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