C13 - What motivate managers and/or managerial accountants of global corporations to set transfer-pricing policies? What are the ethical implications do you see in applying transfer-pricing policies? Explain your answer and provide some examples. (300 words) . C14 - Why do some managers tend to (a) inappropriately ignore opportunity cost. Explain your answer and provide some examples; AND (b) inappropriately consider sunk cost in the decision-making process. Explain your answer and provide some examples (300 words ) Also, need two replies 200 words each for each Disc ussion........ Reply 1,2: 1: It is only recently that transfer pricing has been able to gain such popularity among marketers. It has been seen that Tax policy and administration concerning international transactions, aggressive tax planning, and tax avoidance, have become a rising issue (Cooper et al., 2017). Transfer pricing is the value of goods and services at which these goods and services are transferred from one unit to another unit of a company. Transfer pricing is set for intermediate products that are supplied by the selling division to buying division. For example, when a subsidiary company sells goods or services to its sister company the price that is charged is known as transfer pricing. The main thing that motivates the top management to conduct transfer pricing is to avoid tax payments and increase the profit of the organization. 2: It is to be remembered that an organization is functioning so that it is able to make some profits and this can be made possible with the help of transfer pricing. However, it is also to be noted that transfer pricing is an unethical practice. It is known to be an ethical practice because it is used for evading taxations and for the misrepresentation of the financial stability of an organization. It is to be remembered that transfer pricing might have a negative impact on the investments that are made by multinational corporations (De Mooij, & Liu,2020). Although transfer pricing is able to create pause react it is not able to add any value. It is very important for organizations to ensure that they are functioning in the most ethical way so that they can ensure their stability and sustainability in the market. The methods that are used for transfer policy are- Comparable Uncontrolled Price Method, The Resale Price Method, The Cost Plus Method,  Transactional Profit Methods,  The Profit Split Method, and The Comparable Profits Method  (Gjorgieva-Trajkovska et al., 2019). Reference Cooper, J., Fox, R., Loeprick, J., & Mohindra, K. (2017). Transfer pricing and developing economies: A Handbook for policy makers and practitioners. The World Bank. De Mooij, R., & Liu, L. (2020). At a cost: The real effects of transfer pricing regulations. IMF Economic Review, 68(1), 268-306. Gjorgieva-Trajkovska, O., Svrtinov, V. G., Dimitrova, J., & Koleva, B. (2019). Transfer pricing–definition and methods. Knowledge International Journa.

1. C13 -
What motivate managers and/or managerial accountants of
global corporations to set transfer-pricing policies? What are
the ethical implications do you see in applying transfer-pricing
policies? Explain your answer and provide some examples.
(300 words)
.
C14 -
Why do some managers tend to
(a) inappropriately ignore opportunity cost. Explain your
answer and provide some examples; AND
(b) inappropriately consider sunk cost in the decision-making
process. Explain your answer and provide some examples
(300 words
)
Also, need two replies 200 words each for each Disc
ussion........
Reply 1,2:
1:
It is only recently that transfer pricing has been able to gain
such popularity among marketers. It has been seen that Tax
policy and administration concerning international transactions,
aggressive tax planning, and tax avoidance, have become a
rising issue (Cooper et al., 2017). Transfer pricing is the value
of goods and services at which these goods and services are
transferred from one unit to another unit of a company. Transfer

2. pricing is set for intermediate products that are supplied by the
selling division to buying division. For example, when a
subsidiary company sells goods or services to its sister company
the price that is charged is known as transfer pricing. The main
thing that motivates the top management to conduct transfer
pricing is to avoid tax payments and increase the profit of the
organization.
2:
It is to be remembered that an organization is functioning so
that it is able to make some profits and this can be made
possible with the help of transfer pricing. However, it is also to
be noted that transfer pricing is an unethical practice. It is
known to be an ethical practice because it is used for evading
taxations and for the misrepresentation of the financial stability
of an organization. It is to be remembered that transfer pricing
might have a negative impact on the investments that are made
by multinational corporations (De Mooij, & Liu,2020).
Although transfer pricing is able to create pause react it is not
able to add any value. It is very important for organizations to
ensure that they are functioning in the most ethical way so that
they can ensure their stability and sustainability in the market.
The methods that are used for transfer policy are- Comparable
Uncontrolled Price Method, The Resale Price Method, The Cost
Plus Method,
Transactional Profit Methods,
The Profit Split Method, and The Comparable Profits Method
(Gjorgieva-Trajkovska et al., 2019).
Reference
Cooper, J., Fox, R., Loeprick, J., & Mohindra, K.
(2017). Transfer pricing and developing economies: A
Handbook for policy makers and practitioners. The World Bank.

3. De Mooij, R., & Liu, L. (2020). At a cost: The real effects of
transfer pricing regulations. IMF Economic Review, 68(1), 268-
306.
Gjorgieva-Trajkovska, O., Svrtinov, V. G., Dimitrova, J., &
Koleva, B. (2019). Transfer pricing–definition and
methods. Knowledge International Journal, 35(1), 167-173.
Reply 3,4:
Companies can find new ways to grow through forward-looking
managerial accounting approaches. Improving business
execution and expanding income and productivity can come
about because of applying managerial accounting abilities
across the association.
Today's managerial accounting discipline centers around more
than benefit and misfortune proclamations and stretches out into
center capacities like planning frameworks, improving business
connections inside associations and across the production
network, and executing vital execution measures. The best
chiefs working inside a committed accounting office should take
collective, interdepartmental approaches to accomplishing
results.
Transfers, as opposed to transactions, occur when goods,
services, rights or risks are moved between two legal entities
belonging to the same concern or owner. Unlike transactions,
transfers don't involve two independent economic actors (even
if every one of the entities is a generally autonomous division
or auxiliary); the two gatherings belong to the same
organization and are therefore governed by a single rationale
which both encompasses them and extends beyond them. The
notion of transfers is accordingly a questionable one, for there

4. is a rest between the legal dimension (two legal entities are
united) and the economic dimension (the two entities are
governed by the same rationale). Things become even more
muddled in the case of international transfers, in which the two
entities are located in different countries and hence are
governed by different jurisdictions.
Example
Consider ABC Co., a U.S. based pen company manufacturing
pens at a cost of 10 cents each in the U.S. ABC Co.’s subsidiary
in Canada, XYZ Co., sells the pens to Canadian customers at $1
per pen and spends 10 cents per pen on marketing and
distribution. The group’s total profit amounts to 80 cents per
pen.
Now, ABC Co. will charge a transfer price of between 20 cents
and 80 cents per pen to its subsidiary. In the absence of transfer
price regulations, ABC Co. will identify where tax rates are
lowest and seek to put more profit in that country. Thus, if U.S.
tax rates are higher than Canadian tax rates, the company is
likely to assign the lowest possible transfer price to the sale of
pens to XYZ Co.
C14
A
From a similar but larger point of view, when calculating the
future returns of an investment, the applicable benchmark
discount rate – in effect a form of interest rate-is considered the
chance cost of capital. In other words, this discount rate
addresses the potential returns an investor might have gained
somewhere else (for example saving stores or other tasks).
There are several reasons why we have an inclination to

5. overlook opportunity costs: time strain to execute a task, search
for immediate outcomes, unwillingness to consider alternative
choices, pomposity from past victories, and so on; all of which
may, in a way or another, become a catastrophe waiting to
happen.
For example, to define the costs of a college education, a
student would probably include such costs as tuition, housing,
and books. These costs are examples of accounting or monetary
costs of college, but they in no way, shape or form give an all-
inclusive list of costs. There are many freedom costs that have
been overlooked: (1) wages that might have been earned during
the time burned through attending class, (2) the value of four
years' professional training offered up to go to class, (3) the
value of any activities missed in request to allocate time to
studying, and (4) the value of things that might have purchased
with tuition cash or the interest the cash might have earned
more than four years.
B
A sunk cost is a cost that cannot be recuperated or changed and
is independent of any future costs a business may incur.
Because a decision made today can just impact the future course
of business, sunk costs stemming from earlier decisions ought
to be irrelevant to the decision-making measure.
Examples of sunk costs
Advertising consumption. On the off chance that you advertise
another item, that cash is gone and cannot be recovered.
Research into another item. In the event that the item doesn't
work out, you are left with nothing you can sell on.

6. Labour costs. In the event that a firm sets up another business,
it should utilize individuals to work and manage, these costs
cannot be recuperated.
Installation of another software framework and working
practices.
References
:
CliftonLarsonAllen LLP (2013), Transfer Pricing: History and
Application of Regulations, available at:
http://www.claconnect.com/Tax/United-States-Transfer-Pricing-
Tax-Regulations-ArmsLength-Standard-Tangible-Intangible-
Property.aspx (accessed 19 June 2015).
Doyle, E., Hughes, J. F. and Summers, B. (2013) An Empirical
Analysis of the Ethical Reasoning of Tax Practitioners, Journal
of Business Ethics, 114, pp. 325–339.
Urien, B., and W. Kilbourne. 2011. Generativity and self-
enhancement values in eco-friendly behavioral intentions and
environmentally responsible consumption
behavior.Psychology& Marketing 28(1): 69–90.
Vetter, J., A. Benlian, and T. Hess. 2012. Zur Rolle
versunkenerKosten in aufeinanderfolgendenITOutsourcing-
Entscheidungen. Zeitschriftfu¨rBetriebswirtschaft 82(2): 181–
213.