Determining arm's length remuneration for a Czech manufacturing affiliate under different transfer pricing models.

Topics: Return on Assets Contract Manufacturer Royalty Rates Tax Controversy TNMM/CPM

There are often legitimate concerns with using book value versus market value of assets in applying a Return on Assets approach in transfer pricing. While employing a Return on Costs approach may be a reliable alternative, it must also account for comparability differences in asset intensity.

Topics: Financial Economics Benchmarking CAPM Asset Intensity Adjustment Return on Assets Contract Manufacturer

Dr. Ednaldo Silva illustrates why asset intensity adjustments to the Return on Assets profit indicator are redundant and unviable.

Topics: Asset Intensity Adjustment Profit Indicators Return on Assets

Notwithstanding its acceptance in Coca Cola Co. v. Commissioner of the IRS, Return on Assets is a controversial profit indicator to use in transfer pricing. At the very least it must be subject to economic analysis to corroborate a relationship between operating profit and operating assets.

Topics: Tutorial Profit Indicators Return on Assets Tax Controversy