Segment reporting

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Querist : Anonymous

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Querist : Anonymous (Querist)
23 November 2015 A company has an inter-segment transfer pricing policy of charging at cost less 10%. The market price are generally 25% above cost. Is the policy adopted by the company correct?

23 November 2015 It should be cost plus 10%. Yes the policy adopted by the company is correct if it is cost plus 10%.

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Querist : Anonymous

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Querist : Anonymous (Querist)
23 November 2015 No my question is exactly the same,it is cost less 10% to to inter segments and cost plus 25% to market.

23 November 2015 Then your policy is not correct. Each segment should generate some profit. It can't be cost less.

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Querist : Anonymous

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Querist : Anonymous (Querist)
25 November 2015 what is the base of your answer,can you please explain, where it is mentioned.

25 November 2015 It is practice followed in our company as well as by other companies. No company will charge inter segment pricing at cost less 10%.

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Querist : Anonymous

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Querist : Anonymous (Querist)
26 November 2015 Okay sir, is there any penalty or fine if company is doing so?

26 November 2015 No penalty or fine it is the internal policy of the company it can do so.

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Querist : Anonymous

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Querist : Anonymous (Querist)
26 November 2015 Okay sir. Thank you for your valuable advice.


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