Transfer Pricing: Benefits, Outcomes and Recognition in Current Business Environment

Financial Reporting for
Management

Table of Contents
Introduction......................................................................................................................................3
Part 1................................................................................................................................................3
What is Transfer Pricing and how it is used in the real world. Explain the motivation behind
selection of the respective techniques along with the benefits and outcomes of the techniques.
................................................................................................................................................3
Benefits of transfer pricing.....................................................................................................4
Outcomes of Transfer PRICING............................................................................................5
Part – 2.............................................................................................................................................6
Critically appraise the recognition of transfer pricing in context to the current business
environment............................................................................................................................6
Conclusion.......................................................................................................................................6
Part - 3..............................................................................................................................................7
References........................................................................................................................................7
Books & Journals...................................................................................................................7

Introduction
Financial reporting can be defined as a practice of standard accounting that basically uses
different and relevant accounting statements. This helps the business organization in
disclosing the financial information along with the financial performance of the company to
the stakeholders of the business. It is considered as an important aspect of every
organization because it helps the management of the company to take certain significant
decisions which are basically dependent on the financial health and status of the company.
Profoundly, the potential investors use the company’s financial statements in order to decide
that whether they can grant loans or not. In context to this report, the technique of transfer
pricing is chosen in context to Apple company, in order to understand the effectiveness of
the financial control which can helps an organization in identifying the strengths and
weaknesses of the company.
Part 1
What is Transfer Pricing and how it is used in the real world. Explain the motivation behind
selection of the respective techniques along with the benefits and outcomes of the
techniques.
Transfer Pricing is an accounting practice that addresses the value that one business
division in an organization charges one more division for providing the goods and services.
Transfer Pricing considers the foundation of costs for the products and services traded between
auxiliaries, subsidiaries, or regularly controlled organizations that are important for a similar
bigger undertaking. Transfer Pricing can help in saving taxes in the investment funds for
partnerships, however tax authorities might or might not challenge their cases (Zhang, Zhang and
Yao, 2021). A transfer price is utilized to decide the expense to charge another division,
auxiliary, or holding organization for administrations delivered. Ordinarily, transfer costs are
effective for the business sector cost in order to maintain administration in a proper manner. such
type of pricing technique can likewise be applied to the intellectual property patents, licenses,
and royalties. In context to Apple, transfer pricing is considered as an important technique which