Český finanční a účetní časopis 2007(2):17-27 | DOI: 10.18267/j.cfuc.218
Transfer prices within business combinations
- Ing. Vlastimil Roun, Ph.D. - odborný asistent; Katedra manažerského účetnictví, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3; <roun@vse.cz>.
This text is concerned with problems related to transfer prices within business combinations, particularly multinational enterprises. It is based on the expectation that a company's information system is composed of three basic accounting subsystems: managerial, financial and tax. The difference between the subsystems is primarily a result of the different needs of the users. The main goal of managerial accounting is to provide information for internal users, especially for the purposes of managing the company's business processes. On the other hand, financial accounting focuses mainly on external users, who are interested in the company's financial position, productivity, and its ability to generate financial resources and allocate them in a rational manner. Tax accounting is a very specific subsystem, which has the determination of the tax base as its goal and is a tool for calculating tax obligations. Transfer prices used by business combinations fulfill various functions concurrently in each accounting subsystem. These are functions that, within managerial accounting, are primarily linked to motivation and determination of competency and responsibility. Within financial accounting, internal selling prices primarily serve as a function related to the proper distribution of profits by the syndicate to the appropriate subsidiary. They perform a similar role in tax accounting, which is concerned with the proper allocation of taxable income among individual subsidiaries. This text provides a detailed analysis of the individual methods used for establishing transfer prices in managerial accounting.
Keywords: Transfer Price; Business Combination; Managerial Accounting.
JEL classification: M40
Published: June 1, 2007 Show citation
References
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