Transfer pricing, also called intercompany transactions, refers to the prices used when selling goods and services
between a parent company and its subsidiaries. When transfer pricing, companies may price goods based on the original purchase price or at a depreciated rate. Since transfer prices contribute to income and expenses of parent companies and their subsidiaries, they impact the companies’ financial statements and tax obligations. Transfer pricing transactions represent a significant portion of international trade, resulting in issues of taxation and regulation across international borders.
For this Assignment, consider U.S. and international transfer pricing standards and financial statement disclosure requirements. Identify the transfer pricing financial statement disclosures used by the U.S. company you selected for your Course Project. Think about the implications of transfer pricing regulations on the company. Determine how governing bodies enforce these transfer pricing regulations on an international and U.S. basis.
Write a 2- to 3-page paper analyzing the transfer pricing financial statement disclosures for your selected company. Evaluate the implications of U.S. and international transfer pricing regulations on the taxation of the company. In addition, analyze how governing bodies enforce these transfer pricing regulations on an international and U.S. basis.