Transfer Pricing and Responsibility Centres

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Transfer Pricing and Responsibility Centres


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MOD 03 Discussion

Transfer Pricing

Transfer pricing is an important topic from multiple perspectives. It is a global issue affecting taxation, financial results, performance evaluations, and managerial motivation. Ratios are based on the underlying financial information. Transfer pricing is a topic in itself, but it also affects popular financial measures such as EVA (economic value added).


Hiemann, M. and Reichelstein, R. The Dual Role of Transfer Prices in Multinational Firms: Divisional Performance Measurement and Tax Optimization. The European Financial Review. 

PWC. (2012). Transfer Pricing. Retrieved from 

Slideshare. (2011). Global Management Accounting. Retrieved from 

Value Based (n.d.). Economic Value Added (EVA). Retrieved from 


In this module, we’ll emphasize transfer pricing issues and responsibility centers. Comment on the importance of these issues, how they are related, and why they are very important in the business environment. 

Above find some resources for some of these topics that you can use as a starting point. The links are not meant to provide any particular viewpoint but are a mix of resources viewed both from an accounting and a business perspective. 

Choose one or two topics for further investigation and share your knowledge with the class. Provide factual information (not merely opinions) backed up by current news, examples, or other interesting details. Your comments should be in your own words and include references in APA format, if applicable.


Transfer pricing and responsibility centres Student: Professor: Course title: Date: Transfer pricing and responsibility centres Transfer pricing is understood the method that is employed in selling products from one subsidiary to another subsidiary within a business organization. It occurs when 2 companies which are part of the same transnational corporation trade with each other (Boyd, 2010). A case in point is when a UK-based subsidiary of Pepsi purchases something from a Germany-based subsidiary of Pepsi. When the parties in the transaction establish a price for that transaction, then it is referred to as transfer pricing. Transfer pricing basically impacts the subsidiaries’ purchasing behaviour and might have income tax implications for the business organization as a whole. Even though it is not illicit or necessar


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