IIA Exam IIA-ACCA Topic 1 Question 79 Discussion

Actual exam question for IIA's IIA-ACCA exam

Question #: 79
Topic #: 1

In which of the following scenarios would transfer pricing be used?

ACompany A owns Company B; Company B sells goods to Company A.

BCompany A does not own Company B. Company A charges Company B a fee to sell Company B's goods without taking ownership of the goods.

CCompany A owns both Company B and Company C; all three companies sell goods to the public.

DCompany A moves goods internally from one location to another.

Show Suggested Answer

Suggested Answer: B

by Dan at Jun 21, 2024, 04:45 AM

Limited Time Offer

25%

Off

Get Premium IIA-ACCA Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Chery

2 months ago

Option D? Really? That's like saying I should use transfer pricing when I move goods from my bedroom to the kitchen. Talk about overthinking it!

upvoted 0 times

...

Alica

2 months ago

B just doesn't sound right. If Company A isn't taking ownership, why would they need to worry about transfer pricing? Clearly, A is the way to go here.

upvoted 0 times

Rocco

1 months ago

That could also be a scenario where transfer pricing is used.

upvoted 0 times

...

Belen

1 months ago

D) Company A moves goods internally from one location to another.

upvoted 0 times

...

Filiberto

1 months ago

I agree, option A makes sense for using transfer pricing.

upvoted 0 times

...

Adelina

2 months ago

A) Company A owns Company B; Company B sells goods to Company A.

upvoted 0 times

...

Matthew

2 months ago

Ha! I bet the answer is C. When you have a whole corporate family, transfer pricing becomes a necessary evil to keep the finances straight.

upvoted 0 times

...

Shalon

2 months ago

I'm torn between A and D. Transfer pricing is often used for internal movements of goods too, not just between separate entities.

upvoted 0 times

Lino

1 months ago

D) Company A moves goods internally from one location to another.

upvoted 0 times

...

Sherron

1 months ago

A) Company A owns Company B; Company B sells goods to Company A.

upvoted 0 times

...

Justine

3 months ago

Option A seems the most likely scenario for transfer pricing. When a company owns another, they would use transfer pricing to manage the flow of goods between the two entities.

upvoted 0 times