Final answer:
Cost-based, market-based, and negotiated approaches are all methods of transfer pricing, which is a practice used by companies to price transactions within different divisions of the same corporation.
Step-by-step explanation:
The three approaches of cost-based, market-based, and negotiated are related to transfer pricing. These methods are used by companies to set prices for transactions within an enterprise between different divisions, particularly in international contexts where different tax jurisdictions can impact the overall corporate tax burden. This is important because it affects how multinational companies allocate income, costs, and ultimately taxes, among different countries they operate in.
Cost-based, market-based, and negotiated are three approaches to transfer pricing. Transfer pricing refers to the pricing of goods, services, or intangible assets transferred between different entities within the same company or between related companies. It involves determining the price at which one entity charges another for goods or services in order to allocate costs, profits, and taxes among the entities involved.