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Transfer Price for Intercompany Transfer Order
Q: What amount should I use for my ‘transfer price’?
If we want our transfer price to be the same as its purchase price, we should always use the ‘average cost’ for the corresponding inventory item in our source warehouse (From Location).
As such, when this order is being fulfilled, no gain/loss will be recognized.
However, when i checked my GL impact, I noticed that this is not always the case:
For example:
| Account | Debit | Credit | Subsidiary |
| Intransit | $7 | Source Subsidiary | |
| Asset | $5 | Source Subsidiary | |
| Gain/Loss | $2 | Source Subsidiary |
Is my assumption about using the 'average cost' incorrect?
This would not be a problem if we could use Item Cost as Transfer Cost.
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