What principles determine the appropriateness of transfer prices under U.S. regulations?
What will be an ideal response?
Transfer prices are the prices a firm charges its affiliates when selling goods and services to them. These prices are set internally within a firm and thus are not directly determined by market forces. In the United States, the Internal Revenue Service (IRS) specifies that an appropriate transfer price is one that reflects an "arm's-length price"—that is, one that would be observed in a sale of the good or the service to an unrelated customer. The IRS recognizes five methods that can be used to establish an arm's-length price. The methods, in decreasing order of general acceptance to tax authorities, are the following:
1.The comparable uncontrolled price method
2.The resale price method
3.The cost-plus method
4.The comparable-profits method
5.Other acceptable methods
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Which of the following primary principles of U.S. translation procedures in NOT true?
A) If the financial statements of the foreign subsidiary of a U.S. company are maintained in U.S. dollars, translation is not required. B) If the financial statements of the foreign subsidiary are maintained in the local currency and the local currency is the functional currency, they are translated by the temporal method. C) If the financial statements of the foreign subsidiary are maintained in the local currency and the U.S. dollar is the functional currency, they are remeasured by the temporal method. D) All of the above are true.
The legislation that separated commercial banking from the securities industry is known as the ________
A) National Bank Act B) Federal Reserve Act C) Glass-Steagall Act D) McFadden Act