Multinational transfer pricing: management accounting theory versus practice.: An article from: Management Accounting Quarterly

This digital document is an article from Management Accounting Quarterly, published by Institute of Management Accountants on March 22, 2010. The length of the article is 4032 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.

From the author: MANAGEMENT ACCOUNTING HAS TRADITIONALLY USED A THEORETICAL, ECONOMICS-BASED APPROACH FOR DETERMINING TRANSFER PRICES. NEVERTHELESS, INTERNATIONAL TAX LAW REQUIRES THAT TRANSFER PRICES BE BASED ON AN ARM'S-LENGTH STANDARD. THIS ARTICLE COMPARES THE CONSEQUENCES OF SETTING TRANSFER PRICES UNDER THESE TWO APPROACHES, WHICH ARE DEPENDENT ON WHETHER THE SELLING DIVISION IS OPERATING AT OR BELOW FULL CAPACITY. TO ENSURE THAT TAX COMPLIANCE OBLIGATIONS ARE CONSIDERED WHEN ESTABLISHING TRANSFER PRICES, WE RECOMMEND THAT THE THEORETICAL APPROACH BE MODIFIED SUCH THAT THERE IS NO ADJUSTMENT FOR CAPACITY UTILIZATION. THIS REPRESENTS A SIGNIFICANT SHIFT IN THE TRADITIONAL APPROACH TO TEACHING TRANSFER PRICING.

Citation Details
Title: Multinational transfer pricing: management accounting theory versus practice.
Author: Laurel Adams
Publication:Management Accounting Quarterly (Magazine/Journal)
Date: March 22, 2010
Publisher: Institute of Management Accountants
Volume: 11 Issue: 3 Page: 22

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