Transfer price

A transfer price is the price at which the subsidiaries of a business sell to each other. The concept is needed when the financial results of individual subsidiaries are being compiled. Transfer pricing can be used to avoid paying income taxes in high-tax regions, and so is a significant focus of government auditing activities.

There are a number of transfer pricing methods, such as using the market price, or a negotiated price, or cost plus margin.

Related Courses

Revenue Management 
Revenue Recognition