FUNDS TRANSFER PRICING
This query is : Resolved
13 March 2009
Can u pls explain FTP ( FUNDS TRANSFER PRICING) and its uses for a company
regds,S.KUMAR
regds,S.KUMAR
16 March 2009
Value placed on transfers within an organization, used as a means of allocating costs to various profit centers. Transfer pricing is used widely in multioffice banks and bank holding companies, serving these important functions: (1) price setting for services performed by business units; (2) a means of evaluating financial performance by business units; and (3) determining the contribution to net income by profit centers in the organization.
An example is determining a bank's internal cost of funds, or the cost assigned bank deposits supplied by retail branch offices to its commercial lending division. The retail branches traditionally are suppliers of funds, and commercial lenders traditionally are users of funds. Transfer pricing schemes also are widely used in pricing bank holding company services supplied to affiliate banks, for example, check processing, data processing, and funds supplied by a holding company to a subsidiary bank or a nonbank affiliate company. In lending, transfer pricing can be used as a form of internal credit rationing, by arbitrarily assigning the lowest cost of funds to the least risky loans, encouraging lenders to make loans that are profitable to the bank as well as low-risk. Transfer pricing schemes generally follow one of three cost accounting approaches: (1) market price; (2) cost- based price, generally the marginal cost of funds; or (3) negotiated price, a price determined through negotiation by buyer and seller. Historic cost, on the other hand, normally is used for reference only, and generally is not used in internal pricing.
regards....................!
An example is determining a bank's internal cost of funds, or the cost assigned bank deposits supplied by retail branch offices to its commercial lending division. The retail branches traditionally are suppliers of funds, and commercial lenders traditionally are users of funds. Transfer pricing schemes also are widely used in pricing bank holding company services supplied to affiliate banks, for example, check processing, data processing, and funds supplied by a holding company to a subsidiary bank or a nonbank affiliate company. In lending, transfer pricing can be used as a form of internal credit rationing, by arbitrarily assigning the lowest cost of funds to the least risky loans, encouraging lenders to make loans that are profitable to the bank as well as low-risk. Transfer pricing schemes generally follow one of three cost accounting approaches: (1) market price; (2) cost- based price, generally the marginal cost of funds; or (3) negotiated price, a price determined through negotiation by buyer and seller. Historic cost, on the other hand, normally is used for reference only, and generally is not used in internal pricing.
regards....................!
16 March 2009
Thank u very much.....i will be in touch with u
S.kumar.
S.kumar.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- SEC 54 OF IT ACT
- Form 26QB for TDS on property
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Is Aadhar PAN linking required for opening bank account?
- Where to show the RCM on Rent paid to unregistered landlord
- RCM - commercial rent paid to URP under GST
- Offsetting interest income against derivative trading losses
- TDS NUMBER SURRENDER
- Payable outstanding for years disallowance
- Whether still royalty
- Withholding tax applicabikity for foreign paymenttowqards physio therapy treatment
- Input credit reversal for the FY2023-24
- Regarding Form 15CA & CB
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
