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Exam IIA-CIA-Part3 All Questions

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Exam IIA-CIA-Part3 topic 2 question 250 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 250
Topic #: 2
[All IIA-CIA-Part3 Questions]

The comparable uncontrolled price (CUP) method may be used when setting transfer prices in an organization. What is a common limitation of the CUP method?

  • A. It may be difficult to find a transaction between independent companies that is similar enough to a controlled transaction
  • B. The CUP method is likely to lead to management decisions that are not optimal for the company
  • C. This approach to setting transfer prices is not flexible, as the CUP method does not allow for adjustments
  • D. It offers only an indirect way of ascertaining an arm’s-length price of a controlled transaction
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Suggested Answer: B 🗳️

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Elvoo
1 month ago
Selected Answer: A
WHY NOT A?
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emtofid
1 month, 3 weeks ago
Selected Answer: A
Finding comparable transactions is crucial for the CUP method, but such transactions may not always be readily available or sufficiently similar, making it challenging to apply this method accurately.
upvoted 1 times
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