What are the major benefits of using transfer pricing in organizations? What are the disadvantages?When a company decides to decentralize some of its operational activities, the financial operations between its departments, divisions or subsidiaries are usually actualized using transfer pricing. Transfer pricing is a useful instrument that can be used in managerial accounting to create more ... read more
1 page
300 words
Transfer pricing has the main role of offering motivations for upfront investment and promoting intercompany transfer. When transfer prices are predetermined via negotiation, divisional executives will have inadequate investment motivations as a result of “hold-up” challenges while cost-based transfer method can evade such “hold-up” challenges. Transf... read more
4 pages
1200 words
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