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
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.
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