CHAPTER 32

Cost of Capital in Transfer Pricing

Mark Bronson, David Ptashne, and Michelle Johnson

INTRODUCTION

In this chapter, we discuss the use of cost of capital in transfer pricing analysis, and elaborate on certain measurement issues that arise specifically within transfer pricing applications. Because the approaches applied in a transfer pricing context often differ from those used for financial reporting requirements (specifically those promulgated under ASC 805), we discuss the interrelationship between these two contexts. Last, we provide a subsection that addresses the treatment of returns to capital in transfer pricing analyses involving global dealing operations. ...

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