Chapter 24, Problem 24.6BPR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

(2)

To determine

The increase in S Division, NS Division, and Company E income from operations as a result of transfer pricing

(3)

To determine

To prepare: The income statements for S and NS Divisions of Company E for the year ended December 31, 20Y8

(4)

To determine

The increase in S Division, NS Division, and Company E income from operations as a result of transfer pricing

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

(b)

To determine

To suggest: The transfer price