Week 11 (Guest)

Question 1

Arm’s length price principle

Answer 1

all parties act in their own self-interest and are not subject to pressure from any party

Question 2

Transactional methods

Answer 2

1. Comparable uncontrolle price (CUP) - market based approach
2. Resale Price Minuse - constant gross profit starting from sales price, calculating backwards
3. Cost Plus - constant gross profit starting from costs

Question 3

Profit based transactional methods

Answer 3

4. Transactional Net margin (TNMM) -
   a) operating profit margin
   b) net cost plus margin
5. Profit Split method