What Is Transfer Pricing?
- Transfer pricing accounting occurs when goods or services are exchanged between divisions of the same company.
- A transfer price is based on market prices in charging another division, subsidiary, or holding company for services rendered.
What is included in transfer price?
An item's transfer price is the sales price charged for a good or service in a transaction between two entities under common ownership. Its standard cost, on the other hand, is simply the anticipated cost of all of the item's component parts.
What is transfer pricing example?
Transfer pricing refers to the prices of goods and services that are exchanged between companies under common control. For example, if a subsidiary company sells goods or renders services to its holding company or a sister company, the price charged is referred to as the transfer price.
