Hi All
Could anyone explain in more detail these two new pricing models found in transfer prices...i.e. the formulas used to arrive at the final sales price.
- Percentage of sales price – The percentage of the sales price that is transferred to the lending legal entity.
- Amount below sales price – The amount that the borrowing legal entity holds back from the sales prices before transfer to the lending legal entity.
My understanding is that the transfer prices control inter-company sales prices from a lending company to a borrowing company...so the explanation of the first option ('transferred to the lending legal entity) is a little confusing.
If the lending company raises an internal project invoice to the borrowing company for £1000.00 and and I use a pricing figure of 10.00 my assumption is:
Percent of sales price = £1100.00 (i.e. 1000 + 10%) or is it £100.00 (10% of 1000) or ???
Amount below sales price = £900.00 (i.e. 1000 - 10%)
Thanks in advance.
