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19 CFR Part 152 · 37 questions

19 CFR 152.103 — Transaction value.

Past customs broker license exam questions whose answer rests on 19 CFR 152.103. Drawn from 14 released sittings, April 2018 through October 2025. Every question below is a real released question with the answer CBP credited, the authority it rests on, and an explanation of why that answer is right.

Reading the section itself is one tap away inside the simulator, next to the question, which is how the exam works: open book, against a clock.

April 2018, Q45. Transaction value means:

  1. AThe price actually paid or payable for the merchandise
  2. BThe price actually paid or payable for the merchandise plus buying commissions, royalties, assists, packing costs and proceeds
  3. CThe price actually paid or payable for the merchandise plus selling commissions, royalties, assists, packing costs and proceeds
  4. DThe price actually paid or payable for the merchandise plus selling commissions, royalties, packing costs and U.S. inland freight
  5. EThe price actually paid or payable plus buying commissions, royalties, assists, packing and freight costs
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103 (a) and (b)

The correct answer is C because transaction value includes the price actually paid or payable plus selling commissions, royalties, assists, packing costs, and proceeds, as explicitly stated in 19 CFR 152.103(b), which adjusts the transaction value to include certain expenses directly related to the sale. Options A and E incorrectly include "buying commissions" or "freight costs," which are excluded per Example 4 in the cited authority, which explicitly excludes C.I.F. charges like ocean freight. Option D erroneously adds "U.S. inland freight," a cost not mentioned in the text. Option B incorrectly includes "buying commissions," which are not part of the transaction value adjustments outlined in the examples or the rule.

April 2018, Q46. A U.S. importer and a foreign manufacturer enter into a contract for 500 wooden tables. In the contract, the manufacturer agrees to provide 500 tables at a price of $500 per table. The tables are to be delivered in lots of 100 tables on the first of each month for a period of five months. The importer provided the foreign manufacturer with an assist in the form of special tools. The tools were purchased from an unrelated party in Chicago, and delivered for free to the manufacturer abroad. The tools have a useful life of 500 tables. Several weeks later, the first shipment under the contract, which contains the first 100 tables, arrives in the United States. Which of the following methods of apportioning the assist is NOT acceptable?

  1. AApportion the entire value of the assist to the first 100-table shipment
  2. BApportion the value of the assist over the entire anticipated production
  3. CApportion the entire value of the assist to the second 100-table shipment when it arrives
  4. DApportion the value of the assist over the number of units produced up to the time of the first shipment
  5. EApportion the value of the assist in another manner in accordance with GAAP
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103 (e)(1)

The correct answer is C because 19 CFR 152.103(e)(1) requires that assists be apportioned over the entire anticipated production or the number of units produced up to the time of shipment, not allocated entirely to a single shipment. Allocating the entire assist to the second shipment (option C) fails to distribute the cost proportionally across the total production, which violates the rule. Options A and D are acceptable under the regulation, as they align with apportioning the assist to a shipment or spreading it over units produced up to that point. Option B is also acceptable as it covers the entire anticipated production. Option E is valid under GAAP, which is permitted for apportionment methods.

April 2018, Q47. Your client is importing a used aircraft engine manufactured in England from a Canadian shipper. Your client has accepted the aircraft engine on consignment and has promised to find a US buyer for the engine. Your client will receive a commission on the sale of 5%. The asking price for the engine is $90,000. The shipper paid all of the transportation costs ($1,000) from its dock to your client’s dock on a through bill of lading. What is the entered value of the used aircraft engine?

  1. AUnder transaction value, the entered value of the aircraft engine is the asking price of $90,000
  2. BUnder transaction value, the dutiable value of the aircraft engine is the asking price of $90,000, minus the $1,000 transportation cost, plus the sales commission due the importer of $4,500 ($90,000x5%), or $93,500
  3. CUnder transaction value, the entered value of the aircraft engine is the asking price of $90,000, plus the $1,000 transportation cost, plus the sales commission due the importer of $4,500 ($90,000 x 5%), or $95,500
  4. DUnder transaction value, the entered value of the aircraft engine is the asking price of $90,000, minus the $1,000 transportation cost, minus the sales commission due the importer of $4,500 ($90,000 x 5%), or $84,500
  5. ETransaction value cannot be used on a consignment shipment, the entered value of the aircraft engine cannot be determined under transaction value and one of the other bases of appraisement must be applied
Show the answer and explanation
Correct answer: E  · Authority: 19 CFR 152.103

The correct answer is E because transaction value under 19 CFR 152.103 requires the price actually paid or payable to be determined, but in a consignment shipment, the buyer is not yet identified, and the importer acts on behalf of an undetermined buyer. This ambiguity prevents the application of transaction value, as the "price actually paid or payable" cannot be established. Options A–D incorrectly adjust the asking price by adding or subtracting transportation costs or commissions, which are not part of the transaction value calculation under 19 CFR 152.103. The regulation does not address consignment explicitly but implies that transaction value depends on a clear, agreed-upon price between the buyer and seller, which is absent here.

April 2018, Q49. Seller S offers the following quantity discounts on the goods purchased by the importer prior to their importation. - 1 to 49 units - no discount - 50 to 99 units - 5% discount - Over 100 units - 10% discount In the first case, importer A purchases and imports 60 units in a single shipment. The invoice price reflects a 5% discount. In the second case, importer B purchases 60 units in a single transaction at a price which reflects a 5% discount but imports them in 3 separate shipments each comprising 20 units. What is the customs value of the imported merchandise in both cases?

  1. AIn both cases, the customs value is the price actually paid or payable for the imported goods reflecting a 5% discount.
  2. BIn the first case, the customs value is the price actually paid or payable for the imported goods reflecting a 5% discount. In the second case, the customs value is the price actually paid or payable for the imported goods reflecting no discounts.
  3. CIn both cases, the customs value is the price actually paid or payable for the imported goods reflecting a 10% discount.
  4. DIn the first case, the customs value is the price actually paid or payable for the imported goods reflecting a 5% discount. In the second case, the customs value is the price actually paid or payable for the imported goods reflecting a 10% discount.
  5. EIn both cases, the customs value is the price actually paid or payable for the imported goods reflecting no discounts.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103 (a)(1)

The correct answer is A because 19 CFR 152.103(a)(1) explicitly states that the customs value is the "price actually paid or payable" without regard to discounts, quantity, or shipment method. In both cases, the invoice price reflects a 5% discount, which is the actual price paid by the importer, regardless of whether the goods are imported in one or multiple shipments. Options B and D incorrectly assume that shipment quantity affects the discount, but the regulation does not tie customs value to shipment size or hypothetical discounts not reflected in the invoice. The authority focuses solely on the actual transaction price, not on the seller’s discount tiers or importer’s shipping decisions.

April 2018, Q50. The importer, Company A, imports 1,000 batteries from an unrelated overseas seller at a price of $0.50 CIF per battery. The overseas seller buys the batteries in bulk from an overseas manufacturer. Company A requires each battery to be individually wrapped in polythene with a cardboard backing for display at retail outlets in the United States. Company A provides the polythene and cardboard backing materials free of charge to the overseas seller. Company A obtains the materials from a supplier in the United States at a cost of $40 for the quantity required to wrap 1,000 batteries. The seller of the imported batteries arranges for an overseas packing company to carry out the wrapping/packing. This company charges the seller of the imported goods, $60 per 1,000 batteries for this service. The documents show that the total overseas freight and insurance costs totaled $10. What is the customs value in the United States for a shipment of 1,000 batteries?

  1. A$530
  2. B$500
  3. C$600
  4. D$540
  5. ENone of the above.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(b)

The correct answer is A) $530. Under 19 CFR 152.103(b), the customs value includes the CIF price of $500 (1,000 batteries at $0.50 each) plus the assist of $40 for the polythene and cardboard provided by Company A, totaling $540. The $10 in freight and insurance costs are subtracted because the customs value in the U.S. is based on FOB (free on board) value, which excludes these costs. Option B ($500) ignores the assist, and option D ($540) fails to subtract the freight and insurance, which are not part of the FOB value. Other options either miscalculate the assist or misapply the valuation rules.

April 2019, Q77. An importer enters gas turbines manufactured in China through the Port of Boston. The importer indicates that the basis of appraisal is transaction value based upon a sale of merchandise to the importer from the unrelated manufacturer M. The importer pays a royalty to Company A for the right for manufacturer M to use patented technology in the production of the gas turbines in China. After importation, the imported gas turbines are used in the production of other goods in the United States using a patented technology for which the importer pays Company B for the right to use. The contract between the manufacturer and the importer makes no reference to either Company A’s or Company B’s patented technology, or the royalty payments to the companies. Which of the following describes the dutiable status of the royalty payments and the reason for that status is?

  1. AThe royalty payment to the Company A is dutiable; the royalty payment to Company B is not dutiable. Company A’s patented technology is necessary to produce the imported goods. Company B’s patented technology goes to the right to use technology in the United States and the imported gas turbines are not the subject of the royalty agreement.
  2. BThe royalty payment to the Company A is dutiable; the royalty payment to Company B is dutiable. Both Company A’s and Company’s B patented technology relate to the imported goods.
  3. CThe royalty payment to Company A is not dutiable; the royalty payment to Company B is not dutiable. The contract between the manufacturer M and the importer does not mention the patented technology or royalty payments.
  4. DThe royalty payment to the Company A is not dutiable; the royalty payment to Company B is dutiable. The contract between the manufacturer M and the importer does not mention Company A’s patented technology. Company B’s patented technology is used in further production using the imported goods.
  5. ENone of the above.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(f)

The royalty payment to Company A is dutiable because it is a payment for the use of patented technology in the production of the imported gas turbines in China, which is part of the transaction value under 19 CFR 152.103(f). The royalty to Company B is not dutiable because it relates to post-importation use of patented technology in the United States, which is excluded from transaction value as it pertains to technical assistance or costs incurred after importation. The contract’s silence on the royalties does not affect the dutiable status, as the focus is on the timing and nature of the royalty’s relation to the imported goods.

April 2021, Q68. A foreign subsidiary sells ore to its U.S. parent company. The price of the ore charged by the subsidiary to its parent is the price of ore on the New York Mercantile Exchange on the date the ore arrives in the United States. Select the statement that is TRUE regarding this price.

  1. AThe price is acceptable under transaction value as it is based upon a formula which neither party can control.
  2. BThe price is not acceptable because it is not known at the time of shipment.
  3. CThe price is not acceptable because the parties are related.
  4. DThe price is acceptable under deductive value because it is based on the price of ore sold in the United States.
  5. EThe price is acceptable because the parties are related.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(a)(1)

The correct answer is A because 19 CFR 152.103(a)(1) explicitly states that the price actually paid or payable is acceptable regardless of its derivation method, including formulas like the New York Mercantile Exchange price. The regulation does not require the price to be known at shipment (invalidating B) or disqualify related parties (invalidating C and E) unless other conditions in 19 CFR 152.103(j) apply. Option D is incorrect because deductive value is unrelated to the formula-based transaction value described in the question.

April 2022, Q58. In a transaction with Chinese supplier Rose LLC, U.S. importer Thorn Inc. agreed to pay $100,000.00 for the sale of widgets, shipped Free on Board (FOB) Chicago. However, Rose LLC owed a $20,000.00 debt to a third party, Flower Corporation. Thorn Inc. agreed to pay that debt and then pay $80,000.00 directly to Rose LLC. The international shipping cost was $10,000.00. What is the transaction value of the imported widgets from China?

  1. A$80,000.00
  2. B$20,000.00
  3. C$100,000.00
  4. DThere is no transaction value of the imported widgets from China because Thorn Inc. did not directly arrange to pay the total $100,000.00 to Rose LLC.
  5. E$110,000.00
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103(a)(2) 19 CFR 152.102(f)

The correct answer is C) $100,000.00 because the transaction value under 19 CFR 152.103(a)(1) is the total price actually paid or payable, regardless of how payments are structured or whether they involve third parties. Thorn Inc.’s agreement to pay $100,000 includes both the $80,000 directly to Rose LLC and the $20,000 to settle the debt, as the total price is determined by the agreement between the parties. Option A incorrectly excludes the $20,000 debt payment, which is part of the total consideration. Option D is wrong because 19 CFR 152.103(a)(1) explicitly allows for indirect payments as long as the total price is clear. Option E erroneously adds the $10,000 shipping cost, which 19 CFR 152.103(a)(2) explicitly excludes from transaction value.

April 2022, Q59. Which of the following is NOT an addition to the price actually paid or payable?

  1. AThe international freight cost incurred by the buyer
  2. BAny selling commission incurred by the buyer
  3. CThe value, apportioned as appropriate, of any assist
  4. DAny royalty or license fee that the buyer is required to pay, directly or indirectly, as a condition of the sale
  5. EThe packing cost incurred by the buyer with respect to the imported merchandise
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(b)

The correct answer is A because 19 CFR 152.103(b)(1) explicitly lists packing costs (E), selling commissions (B), assist (C), and royalty/license fees (D) as additions to the price actually paid or payable, but does not mention international freight costs. Freight costs are not included in the additions described in the cited text. The other options are directly referenced in the regulation as required additions, while international freight costs are excluded from this specific list.

April 2026, Q71. Of the following importation scenarios, which has a Transaction Value?

  1. AWhile negotiating business and transaction terms with an intended importer, the foreign manufacturer imports 10,000 refrigerator time switches to a storage facility in an effort to beat pending tariff increases.
  2. BAn event operator is hosting a large public aerospace convention and is importing multiple goods from multiple manufacturers for consignment sale. The articles are not samples and will be sold to convention attendees.
  3. CA foreign manufacturer sells merchandise to a related U.S. importer. The foreign seller does not sell identical merchandise or similar merchandise to any unrelated parties. The transaction between the foreign seller and the U.S. importer is determined by Customs to be unaffected by the relationship.
  4. DA foreign manufacturer of industrial drones is importing promotional steel airplane models to be given to each purchaser of a drone as a thank you gift.
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103(j)(2)(i)

The correct answer is C because it involves a valid sale where the price actually paid or payable is established, and Customs has determined the transaction is unaffected by the relationship between the parties, satisfying the requirements of 19 CFR 152.103(a). Option A lacks a sale or agreement to sell, as the goods are stored for tariff avoidance, not for a transaction. Option B involves consignment sale, but the question does not confirm a price actually paid or payable, which is essential for transaction value. Option D involves promotional items given as gifts, which are not subject to transaction value under 19 CFR 152.103 because they are not sold.

April 2026, Q75. A foreign subsidiary sells ore to its U.S. parent company. The price of the ore charged by the subsidiary to its parent is the price of ore on the New York Mercantile Exchange on the date the ore arrives in the United States. Select the statement that is TRUE regarding this price.

  1. AThe price is acceptable under transaction value as it is based upon a formula which neither party can control.
  2. BThe price is not acceptable because it is not known at the time of shipment.
  3. CThe price is not acceptable because the parties are related.
  4. DThe price is acceptable under deductive value because it is based on the price of ore sold in the United States.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(a)(1)

The correct answer is A because 19 CFR 152.103(a)(1) explicitly states that the price actually paid or payable is acceptable regardless of how it is derived, including through formulas like market prices. The regulation does not require the price to be known at the time of shipment (invalidating B) or disqualify related parties if the price is objectively determined (invalidating C). Option D is incorrect because deductive value is not mentioned in the cited authority; the rule focuses on transaction value, not deductive value. The formula-based price here meets the criteria for transaction value under 19 CFR 152.103(a)(1).

April 2026, Q76. A U.S. buyer purchased merchandise from an unrelated manufacturer in India. The terms of the sale were ex-factory packed. The U.S. buyer paid the foreign manufacturer $18,344 which included a $1,500 packing fee. The U.S. buyer also paid $4,500 to a freight forwarder to cover expenses for inland freight of $500 and air freight of $4,000. In addition, the U.S. buyer paid a commission of $1,500 to a buying agent who facilitated the purchase of the merchandise. What is the entered value for the imported merchandise?

  1. A$18,344.00
  2. B$12,344.00
  3. C$6,500.00
  4. D$25,844.00
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(a)(5)(i)

The correct answer is A) $18,344.00 because the entered value is the total amount paid to the seller (the foreign manufacturer), including the $1,500 packing fee, as per 19 CFR 152.103(a)(5)(i). This section explicitly states that the price actually paid or payable includes all amounts directly paid to the seller, regardless of whether they are labeled as fees or expenses. The $4,500 freight and $1,500 commission are excluded because they are post-shipment transportation costs and selling expenses, respectively, which are not added to the transaction value under the cited authority. The example in the text clarifies that fees not tied to the sale’s conditions (like the commission) are not included.

April 2026, Q78. Luxury Resins, a Japanese producer of plastic materials, sold resin to Phone Cases Plus, an unrelated U.S. manufacturer, for $20,000. Later, Phone Cases Plus decides to pay a $2,000 royalty to Disney for the right to manufacture and sell Disney-branded phone cases. It makes these phone cases out of the resin purchased from Luxury Resins. What is the transaction value of the transaction between Luxury Resins and Phone Cases Plus?

  1. A$18,000.00
  2. B$20,000.00
  3. C$22,000.00
  4. D$2,000.00
Show the answer and explanation
Correct answer: B  · Authority: 19 CFR 152.103(f)

The correct answer is B) $20,000.00 because the transaction value is the price actually paid or payable for the imported merchandise, as stated in 19 CFR 152.103(a). The $2,000 royalty to Disney is unrelated to the transaction between Luxury Resins and Phone Cases Plus and is not included in the transaction value, as 19 CFR 152.103(f) specifies that royalties for patents covering manufacturing processes are dutiable but does not extend to trademarks. Options A and C incorrectly add or subtract the royalty, which is not part of the transaction value for the resin. Option D refers only to the royalty, not the total transaction value.

May 2024, Q69. The U.S. importer entered into an agreement with an unrelated exporter/manufacturer for the purchase of 10,000 branded hats. The purchase contract contained the following terms: the price for the 10,000 hats is $50,000.00; the merchandise may be resold only in New York; and the buyer indicates that it will spend $5,000.00 on his own account to promote the sale of the merchandise. No selling commission, assist, royalty, or license fee is involved. Is transaction value the proper method of appraisement and, if so, what is the transaction value?

  1. ANo, transaction value is inapplicable because there is a restriction on the disposition or use of the merchandise (i.e., the merchandise may be resold only in New York).
  2. BYes, $50,000.00
  3. CYes, but it is impossible to calculate the transaction value based on the information provided
  4. DYes, $55,000.00
Show the answer and explanation
Correct answer: B  · Authority: 19 CFR 152.103(a)(2)

The correct answer is B because transaction value is the price actually paid or payable, which is $50,000, as stated in 19 CFR 152.103(a)(2). Restrictions on resale (e.g., limited to New York) do not invalidate transaction value under this rule, which explicitly states that such restrictions are disregarded. The $5,000 promotion is the buyer’s own expense and not an assist, royalty, or license fee, so it is not added to the transaction value. Options A and D incorrectly apply rules not mentioned in the cited text, while C misinterprets the sufficiency of the cited authority.

May 2024, Q73. Gemma Jones purchases 10,000 glass vases from Sklyana Vasa Company (SVC). The wholesale price charged by SVC is $3.00 per vase with the following volume discounts: Quantity Range Discount 0 – 1,000 vases Full price 1,001 – 5,000 vases 5% discount 5,001 – 15,000 vases 10% discount 15,001 – 25,000 vases 15% discount Jones receives the shipment and finds that 100 of the vases are broken. She contacts SVC who agrees not to charge her for the broken vases. What is the transaction value for the vases?

  1. A$26,730.00
  2. B$27,000.00
  3. C$28,215.00
  4. D$29,700.00
Show the answer and explanation
Correct answer: B  · Authority: 19 CFR 152.103(a)(1)

The correct answer is B) $27,000.00 because the transaction value is determined by the price actually paid or payable, including applicable discounts, as per 19 CFR 152.103(a)(1). The 10% discount applies to the total ordered quantity (10,000 vases), resulting in $2.70 per vase. The broken vases are excluded from the transaction value since they were not delivered, but the discount is based on the original order quantity, not the delivered quantity. Option A incorrectly subtracts the broken vases after applying the discount, which misapplies the rule. Options C and D reflect incorrect discount calculations or misinterpretations of the discount tiers.

May 2024, Q77. Transaction value means:

  1. AThe price actually paid or payable for the merchandise.
  2. BThe price actually paid or payable for the merchandise plus buying commissions, royalties, assists, packing costs, and proceeds.
  3. CThe price actually paid or payable for the merchandise plus selling commissions, royalties, packing costs, and U.S. inland freight.
  4. DThe price actually paid or payable for the merchandise plus selling commissions, royalties, assists, packing costs, and proceeds.
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(a), 19 CFR 152.103(b)

The correct answer is D because transaction value includes the price actually paid or payable plus selling commissions, royalties, assists, packing costs, and proceeds, as specified in 19 CFR 152.103(a) and (b). Option A is incomplete because it omits adjustments required by the regulations. Option B incorrectly includes "buying commissions" instead of "selling commissions," which are the correct adjustments. Option C erroneously adds "U.S. inland freight," which is not part of transaction value under the cited authority. The inclusion of "proceeds" in D aligns with the regulation’s requirement to account for indirect payments or other adjustments to the base price.

October 2018, Q64. A U.S. importer purchased automobile tires from a manufacturer located in Seoul, South Korea. The importer paid $47,780 ex-factory. The price does not include U.S. duty (2.5 % ad valorem for the tires), MPF (.3464%), HMF (.125%), and inland freight from Seoul to the Port of Busan, South Korea ($3,075). What is the entered value?

  1. A$ 43,285
  2. B$ 44,705
  3. C$ 46,360
  4. D$ 47,780
  5. E$ 50,855
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(a)

The correct answer is D) $47,780 because the entered value is the "price actually paid or payable" under 19 CFR 152.103(a), which includes the ex-factory price without adjustments for foreign inland freight or other charges not included in the transaction. The $3,075 inland freight is excluded because the price does not include it, as clarified in 19 CFR 152.103(a)(5)(i), which states that foreign inland freight charges are not added to the transaction value if not included in the price paid. Options A, B, and C incorrectly subtract costs or duties that are not part of the entered value calculation. Option E adds unmentioned charges, which are irrelevant.

October 2019, Q49. Which of the following costs should NOT be added to the price actually paid or payable to determine the transaction value for an entry of plush toys of a popular cartoon character?

  1. AThe cost of several high-speed sewing machines provided free of charge by the U.S. buyer/importer to the foreign manufacturer/exporter to sew the plush toys
  2. BThe sewing pattern designed in Canada, which is provided free of charge by the U.S. buyer to the foreign manufacturer
  3. CThe shipping costs paid by the U.S. buyer to import the plush toys
  4. DThe packing costs paid by the U.S. buyer
  5. EThe royalty fees related to the plush toys which the U.S. buyer is required to pay as a condition of the sale
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103(b)

The correct answer is C because shipping costs paid by the U.S. buyer are not included in the transaction value under 19 CFR 152.103(b), which specifies that transaction value includes the price actually paid or payable, plus certain adjustments like royalties (E) and packing costs (D), but explicitly excludes costs incurred after importation, such as shipping. The example in the regulation clarifies that post-importation costs, like shipping, are not part of the transaction value. Options A and B involve costs provided free by the buyer, which may not be included if they are not directly tied to the price paid, but the regulation does not explicitly address them, whereas C is directly excluded by the cited authority.

October 2019, Q50. Auto Parts USA, located in Michigan, is a subsidiary of Auto Parts International, located in Germany. Auto Parts USA buys and imports thousands of brake pads from Auto Parts International each year. Auto Parts USA purchases each brake pad from Auto Parts International for exactly $10 per brake pad. Auto Parts USA would like to apply transaction value to its importations of brake pads. In order to establish that the relationship between Auto Parts USA and Auto Parts International did not affect the price actually paid or payable, Auto Parts USA has submitted to CBP the two parties’ relevant bills, invoices and financial statements. In fiscal year 2018, the manufacturing bills and invoices showed that after recovering all costs, Auto Parts International made a profit of approximately 6 percent on each sale of its brake pads to Auto Parts USA. The financial statements reflected that Auto Parts International captured a firm-wide profit of approximately 6.3 percent on total brake pad sales in fiscal year 2018. On what basis has Auto Parts USA demonstrated that the relationship between the two parties did not affect the price actually paid or payable?

  1. AThe two parties settled the price in a manner consistent with the normal pricing practices of the auto parts industry.
  2. BThe two parties showed that the price closely approximates a test value.
  3. CThe two parties showed that the price closely approximates the transaction value of similar merchandise in sales to unrelated buyers in the United States.
  4. DThe two parties showed that CBP has previously examined the relationship.
  5. EThe two parties showed that the price is adequate to ensure recovery of all costs plus a profit which is equivalent to the firm’s overall profit realized over a representative period of time in sales of merchandise of the same class or kind.
Show the answer and explanation
Correct answer: E  · Authority: 19 CFR 152.103(1)(1)(iii), 19 CFR 152.103 (j)

Auto Parts USA demonstrated that the relationship did not affect the price by showing the price included a profit margin consistent with the firm’s overall profit over a representative period, as required by 19 CFR 152.103(j). This section mandates that for related parties, the transaction value must ensure recovery of all costs plus a profit equivalent to the firm’s normal profit level. Option E directly aligns with this rule. Other options, such as A (industry practices) or C (similar merchandise to unrelated buyers), are not explicitly required by the cited authority for related-party transactions. Option B (test value) and D (CBP examination) are not supported by the cited authority.

October 2020 (AM), Q77. The U.S. importer entered into an agreement with an unrelated exporter/producer for the purchase of 1,000 units of branded merchandise. The purchase contract contained the following terms: the price for the 1,000 units of merchandise is $100,000, the merchandise may be resold only in California, and the importer must spend $10,000 of his own funds to promote the sale of the merchandise. No selling commission, assist, royalty, or license fee is involved. Is transaction value the proper method of appraisement and, if so, what is the transaction value?

  1. ANo, transaction value is inapplicable because there is a restriction on the disposition or use of the merchandise (i.e., the merchandise may be resold only in California)
  2. BYes, $110,000
  3. CYes, but it is impossible to calculate the transaction value based on the information provided
  4. DYes, $100,000
  5. ENo, transaction value is inapplicable because the merchandise is branded
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103

The correct answer is D because the transaction value is the price actually paid or payable, which is $100,000, as stated in 19 CFR 152.103(a). Restrictions on resale (e.g., limited to California) do not invalidate transaction value, as the regulation explicitly states that such restrictions are disregarded in determining the price. The $10,000 promotion cost is not an assist, royalty, or license fee (which might be added under other rules), so it is not included in the transaction value. Option A is incorrect because 19 CFR 152.103(a) explicitly disregards restrictions on use or disposition. Option B incorrectly adds the $10,000 promotion cost, which is not part of the transaction value under the cited authority. Option C is incorrect because the transaction value is clearly defined by the $100,000 contract price. Option E is incorrect because branding does not affect the applicability of transaction value under 19 CFR 152.103.

October 2020 (AM), Q78. Importer ABC company wishes to purchase trademarked watches from seller XYZ Limited. The price of the watches is $200 each. XYZ will not sell unless ABC pays them an additional fee of $10 per watch for the right to the trademark. This fee is:

  1. AA selling commission to be added to the PAPP
  2. BA buying commission to be deducted from the PAPP
  3. CA proceed of sale to be added to the PAPP
  4. DA royalty to be added to the PAPP
  5. EAn unquantifiable addition to the PAPP, which precludes the establishment of Transaction Value
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(b)

The correct answer is D because the $10 fee is a royalty paid for the right to use a trademark, which under 19 CFR 152.103(b) must be added to the price actually paid or payable (PAPP) as it is a payment directly tied to the imported goods. Options A and B incorrectly classify the fee as a commission, which is not applicable here since the fee is not a service charge but a royalty. Option C mischaracterizes the fee as a "proceed of sale," which does not align with the nature of the payment. Option E is incorrect because the fee is quantifiable and directly related to the transaction, allowing the transaction value to be established.

October 2021, Q56. Exporter E provides the following quantity discounts on mattresses purchased by importers before their importation: • 1 to 99 mattresses - no discount • 100 to 499 mattresses - 10% discount • Over 500 mattresses - 15% discount Under the first scenario, Importer X purchases and imports 120 mattresses in a single shipment. The invoice price reflects a 10% discount. Under the second scenario, Importer Y purchases 120 mattresses in a single transaction at a price which reflects a 10% discount but imports them in four separate shipments each comprising 30 mattresses. What is the customs value of the imported mattresses under the two scenarios?

  1. AUnder both scenarios, the customs value is the price actually paid or payable for the imported mattresses reflecting a 10% discount.
  2. BUnder the first scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting a 10% discount. Under the second scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting no discounts.
  3. CUnder both scenarios, the customs value is the price actually paid or payable for the imported mattresses reflecting no discounts.
  4. DUnder the first scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting a 10% discount. Under the second scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting a 15% discount.
  5. EIn both cases, the customs value is the price actually paid or payable for the imported mattresses reflecting a 15% discount.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(a)(1)

The correct answer is A because 19 CFR 152.103(a)(1) explicitly states that customs value is determined by the "price actually paid or payable," which includes discounts regardless of shipment method. Both importers paid a 10% discount on 120 mattresses, so the customs value reflects that discount in both scenarios. Options B and D are incorrect because they assume shipment method affects the discount, but the regulation does not link customs value to shipment quantity or timing. Option C is wrong because it ignores the discount entirely, which the cited authority explicitly includes. Option E is incorrect because it applies a 15% discount, which applies only to purchases over 500 units, not 120.

October 2021, Q57. A foreign commercial invoice reports a value of $7,200 with an addition of $800 for “distributor fee” for a total invoice of $8,000. The fee charged by the seller compensates the exclusive U.S. distributor who, by agreement with the foreign seller, receives 10% of all sales in the U.S. as a commission. The distributor receives this regardless of whether or not they actually make the sale. The $800 would be:

  1. AA selling commission to be added to the price actually paid or payable
  2. BA selling commission; part of the price actually paid or payable
  3. CA buying commission to be added to the price actually paid or payable
  4. DA buying commission; part of the price actually paid or payable
  5. ENot part of the transaction value
Show the answer and explanation
Correct answer: B  · Authority: 19 CFR 152.103 (b)(ii)

The correct answer is B because the $800 distributor fee is a selling commission directly tied to the transaction, as the seller charges it as part of the sale agreement, making it part of the price actually paid or payable under 19 CFR 152.103 (a). Options A and C incorrectly classify it as "added to" the price, which would apply if the fee were a separate expense not tied to the sale, but the rule explicitly includes such fees when they are a condition of the sale. Options D and E are incorrect because the fee is not a buying commission (the distributor is a third party, not the buyer) and the text does not support excluding it from the transaction value.

October 2021, Q60. Toys for All is a U.S. importer of toys from several countries. The company approaches the broker to discuss its current valuation method. The company provides details on various items and costs that are provided to the supplier in relation to the sale of the goods to the U.S. Which of the following would NOT be considered part of the transaction value for CBP purposes?

  1. AU.S. origin gameboard pieces provided to the supplier free of charge to be incorporated into the finished game.
  2. BA U.S. origin mold that is sold to the supplier at a cost of $500. The mold, which is new, was purchased by Toys for All for $5,000 and shipped directly to the supplier for use in producing game pieces.
  3. CDesign work related to the games that was prepared in Italy, purchased by Toys for All and provided to the supplier free of charge.
  4. DDesign work related to the games, prepared in Denver, Colorado, purchased by Toys for All and provided to the supplier free of charge.
  5. EMachinery that Toys for All purchases in China and ships to the supplier free of charge for use in production of the imported games.
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(b), 19 CFR 152.102(a)

The correct answer is D. Explanation: The key phrase in the question is "it's U.S. origin and provided free". This implies that the item in question is not subject to import duties or tariffs, as it is not being imported (it's U.S. origin) and is provided free of charge. Under 19 U.S.C. § 152.102(a) (which is part of the U.S. Customs and Border Protection regulations), free-of-charge goods (such as samples, gifts, or items provided at no cost) are generally not subject to import duties if they are not entered for consumption (i.e., not for sale or use in the U.S.). However, the origin of the goods is still relevant for tariff classification and rules of origin in trade agreements. In this case, since the item is U.S. origin, it is not subject to import duties when entering the U.S. (as it is not being imported from another country). Therefore, D is the correct answer, as it aligns with the exemption from import duties for U.S.-origin goods provided free of charge. Summary: D is correct because U.S. origin goods are not subject to import duties. Other options (A, B, C) may involve non-U.S. origin goods or goods for sale, which could be subject to duties or tariffs.

October 2022, Q31. 123 Import Company, a US importer, is seeking guidance on valuation methods for its various contracts with overseas vendors from whom it has imported or intends to import merchandise from a duly licensed broker. Which one of the following contracts would the broker advise 123 Import Company that transaction value cannot be the basis of appraisement on importation as the regulatory requirements for using transaction value are not met?

  1. A123 Import Company has contracted with Y Toy Company abroad to purchase toys. The Y Toy company owes money to its creditor Z Factor Company. The Y Toy Company contract with 123 Import Company provides that 123 Import Company will pay Z Factor Company one-third of the purchase price and pay the remaining two-thirds to Y Toy Company. The contract price is for both payments.
  2. B123 Import Company has contracted with Y Toy Company abroad to manufacture toys. 123 Import Company has contracted with, and will directly pay, Tiny’s Beads, a foreign manufacturer, to ship the plastic beads to Y Toy Company that it needs to manufacture the toys. The contract price is for Y Toy Company’s costs and profit.
  3. C123 Import Company has contracted with 123 Export Company, an unrelated company abroad to import National Football League (NFL)-branded jerseys. 123 Import Company has an NFL license and pays a royalty to the NFL for every NFL-branded jersey it imports. The contract price is as determined by 123 Export Company in the signed contract.
  4. D123 Import Company has contracted with X-treme Company abroad to import office chairs on consignment. 123 Import Company will offer the office chairs for sale in the US and pay X-treme Company within 10 days of the sale. The contract price is for 40% of the usual retail price of the chairs with payment due within 10 days of each sale.
  5. E123 Import Company (importer) has contracted with New Company (seller) abroad to import 1000 units of a brand-new product for which the market in the US is uncertain. Importer agrees to pay seller $10.00 per unit immediately with an additional $10.00 upon the sale of each unit in the US. Seller will buy back any unsold merchandise in 180 days. The contract price is $10,000.00, plus $10 per unit due after sale.
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103

The correct answer is D because under 19 CFR 152.103, transaction value requires a price actually paid or payable at the time of importation. In option D, the contract specifies payment only after the sale of the chairs in the U.S., making the price contingent on a future event rather than a fixed amount payable at importation. This violates the requirement for a determinable price at the time of importation. Other options involve fixed or directly payable prices (A, B, C, E), even if they include third-party obligations or royalties, which are explicitly addressed in the regulation.

October 2022, Q33. The importer, a construction company, purchased construction cranes from a foreign supplier. Due to the size of the cranes, they are exported to the United States unassembled. The assembly of the cranes by employees of the supplier, after importation, is included in the purchase price and separately identified on the invoice. The assembly charge is reasonable for the work to be performed. Transaction value is the proper method of appraisement. Based upon these facts, which statement below is correct?

  1. ABecause the charge for the post-importation assembly of the merchandise is separately identified on the foreign supplier’s invoice to the importer and is reasonable for the work performed, the charge for the assembly is included as an assist in transaction value and is dutiable.
  2. BBecause the charge for the post-importation assembly of the merchandise is separately identified on the foreign supplier’s invoice to the importer and is reasonable for the work performed, the charge for the assembly is included in transaction value and is dutiable.
  3. CBecause the charge for the post-importation assembly of the merchandise is included in the definition of the price actually paid or payable, whether or not separately identified on the foreign supplier’s invoice to the importer or reasonable for the work performed, the charge for assembly is included in transaction value and is not dutiable.
  4. DBecause the charge for the post-importation assembly of the merchandise is for services rendered in the United States and is payable to the foreign supplier, the charge for assembly is a domestic fee that is excluded from transaction value and is dutiable.
  5. EBecause the charge for the post-importation assembly of the merchandise is separately identified on the foreign supplier’s invoice to the importer and is reasonable for the work performed, the charge for the assembly is excluded from transaction value and is not dutiable.
Show the answer and explanation
Correct answer: E  · Authority: 19 CFR 152.103(i)

The correct answer is E because 19 CFR 152.103(i) explicitly excludes from transaction value any reasonable post-importation costs for assembly, provided they are separately identified on the invoice. The assembly charge here meets these criteria, so it is excluded from transaction value and not dutiable. Option A incorrectly labels the charge as an "assist," which is not a term used in the cited authority. Option B erroneously includes the charge in transaction value, violating the exclusion rule. Option C misstates the rule by claiming the charge is included in the "price actually paid or payable," which contradicts the regulation. Option D incorrectly classifies the charge as a "domestic fee," but the assembly is performed by the foreign supplier, not a U.S. entity.

October 2023, Q49. Choose the ONE answer that correctly fills in the blank. The transaction value of imported merchandise is the price actually paid or payable for the merchandise when sold for exportation to the United States, plus amounts equal to _____.

  1. Abuying commissions, royalties, assists, packing costs, and proceeds.
  2. Bselling commissions, royalties, assists, packing costs, and proceeds.
  3. Cselling commissions, royalties, packing costs and U.S. inland freight.
  4. Dbuying commissions, royalties, assists, packing and ocean freight costs.
Show the answer and explanation
Correct answer: B  · Authority: 19 CFR 152.103(a) (b)

The correct answer is B because 19 CFR 152.103(b)(1) explicitly lists "selling commissions," "royalties," "assists," "packing costs," and "proceeds" as additions to the price actually paid or payable. The other options are incorrect because "buying commissions" (A and D) are not mentioned in the cited authority, and "U.S. inland freight" (C) is not listed as an addition. The regulation specifically refers to "selling commissions" and "proceeds" from resale, not inland freight or buying commissions.

October 2023, Q53. Appraise the total transaction value for the We Are Toys shipment described below. Foreign shipper sells the Lords of Riverbank board game and other board games to U.S.- based game product wholesalers and retailers. The price per unit to the wholesalers is the foreign shipper's suggested retail price in the U.S. discounted by 70 percent (70%). The price per unit to retailers is the foreign shipper's suggested retail price in the U.S. discounted by 50 percent (50%). All other terms are the same for both wholesalers and retailers. The foreign shipper's suggested retail price in the U.S. for the Lords of Riverbank is $80.00. The foreign shipper sells the Lords of Riverbank board game and similar board games to wholesalers in the U.S. on a continuous basis. We Are Toys is a U.S. retailer and purchases 50 copies of Lords of Riverbank, packed, ready for shipment with no selling commission, assist, royalty fee or license fee.

  1. A$24.00
  2. B$40.00
  3. C$1,200.00
  4. D$2,000.00
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(a) Example 3

The correct answer is D) $2,000.00 because the transaction value is determined by the price actually paid or payable, which for the retailer is 50% of the foreign shipper’s suggested retail price of $80.00, resulting in $40.00 per unit. Multiplying $40.00 by 50 units gives $2,000.00. Option A ($24.00) incorrectly applies the 70% discount intended for wholesalers, not retailers. Option B ($40.00) reflects the per-unit price but omits the total quantity. Option C ($1,200.00) likely miscalculates the discount or quantity. 19 CFR 152.103(a) explicitly states that transaction value is based on the actual price paid, regardless of discounts or other terms.

October 2023, Q54. Which regulation defines methodologies that may be accepted by CBP for the reasonable apportionment of the total value of an assist?

  1. A19 CFR 10.593(p)
  2. B19 CFR 10.1013(p)
  3. C19 CFR 152.103(e)
  4. D19 CFR 190.51(e)(3)
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103(e)

The correct answer is C because 19 CFR 152.103(e) explicitly addresses methodologies for determining transaction value, including factors to assess whether a transaction value "closely approximates" test values, which may involve apportioning the total value of an assist. The other options do not pertain to valuation methodologies or apportionment rules. For example, 19 CFR 10.593(p) relates to marking requirements, 19 CFR 10.1013(p) concerns importation procedures, and 19 CFR 190.51(e)(3) addresses administrative procedures unrelated to valuation. The cited authority directly supports the apportionment context through its discussion of test values and factors for evaluation.

October 2024, Q74. Acme Company in the United States paid $7,000 to a Brazilian factory for a shipment of hula hoops, CIF terms of sale. The $7,000 consists of $6,500 for the toys and $500 for ocean freight and insurance. The Brazilian factory charged Acme Company $8,250 for the toys; however, because the Brazilian factory owed Acme Company $1,750, the Brazilian factory charged only $6,500 for the hula hoops. What is the transaction value?

  1. A$6,500.00
  2. B$7,000.00
  3. C$8,250.00
  4. D$8,750.00
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103(a)(2); 19 CFR 152.102(f)

The correct answer is C) $8,250.00 because the transaction value is the "price actually paid or payable" under 19 CFR 152.103(a)(1), which includes the full amount agreed upon by the parties before any offsets or debts. The $1,750 debt owed by the Brazilian factory to Acme does not reduce the transaction value, as the price payable remains $8,250. Option A ($6,500) incorrectly assumes the debt reduces the transaction value, but 19 CFR 152.103(a)(1) explicitly states the price is determined without regard to debts or offsets. Option B ($7,000) includes freight and insurance, which are not part of the transaction value under CIF terms, as the transaction value pertains to the goods themselves, not transportation costs. Option D ($8,750) incorrectly adds the freight and insurance to the original price, which is not required by the cited authority.

October 2024, Q77. Which of the following costs should not be added to the price actually paid or payable to determine the transaction value for an entry of luxury watches?

  1. AThe watch face and band pattern designed in Switzerland, which is provided free of charge by the U.S. buyer to the foreign manufacturer.
  2. BThe royalty fees related to the luxury watches which the U.S. buyer is required to pay as a condition of the sale.
  3. CThe cost of several milling machines provided free of charge by the U.S. buyer/importer to the foreign manufacturer/exporter to cut and shape parts such as gears.
  4. DThe shipping costs paid by the U.S. buyer to import the luxury watches.
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(b)(1); 19 CFR 152.102(a); 19 CFR 152.103(d)

The correct answer is D because shipping costs paid by the U.S. buyer to import the merchandise are explicitly excluded from transaction value under 19 CFR 152.103(d), which states that transaction value does not include costs incurred after importation, such as transportation expenses. Option B is included because royalty fees required by the sale are part of the price actually paid or payable under 19 CFR 152.103(b)(1). Option A is included because the watch face and band pattern, even if provided free by the buyer, are part of the sale’s conditions and thus part of the transaction value. Option C is included because the milling machines, though provided free, are directly related to the production of the imported merchandise and are considered part of the price under the general rule in 19 CFR 152.103(a).

October 2024, Q80. A mold for toys was provided free of charge to a French manufacturer by the U.S. importer. The original cost of the mold was $180,000 but 2/3 of the useful life of the mold had been used by the U.S. importer prior to sending it to France. The U.S. Importer paid the freight cost of $1,600. When calculating transaction value, what is the total value of the assist for the mold?

  1. A$0.00
  2. B$61,600.00
  3. C$180,000.00
  4. D$181,600.00
Show the answer and explanation
Correct answer: B  · Authority: 19 CFR 152.103(d)(2)

The correct answer is B) $61,600.00 because the value of the assist (the mold) is calculated by adjusting the original cost for depreciation and adding the freight cost. The original cost of $180,000 is reduced by 2/3 of its useful life, leaving 1/3 of $180,000, or $60,000, and the $1,600 freight cost is added, totaling $61,600. This aligns with 19 CFR 152.103(d)(2), which requires apportioning the value of assists based on remaining useful life and including associated costs. Option A ignores the assist entirely, which is incorrect under the rule. Option C uses the full original cost without depreciation, violating the apportionment requirement. Option D incorrectly adds the full original cost and freight, failing to account for depreciation.

October 2025, Q21. What is the dutiable value of the press?

  1. A$65,000.00
  2. B$80,000.00
  3. C$99,600.00
  4. D$114,600.00
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(a)(1); 19 CFR 152.103(i)

The correct answer is A because the dutiable value is the price actually paid or payable, as stated in 19 CFR 152.103(a)(1), which includes the transaction value without additions for U.S. costs or other factors. The other options likely include incorrect additions, such as royalties or assists, which are not automatically included in the transaction value unless explicitly required by the rules. For example, while assists like molds may be added under 19 CFR 152.103(e), the question does not indicate such an assist is involved here, so the base price of $65,000 remains the correct value.

October 2025, Q66. USA Corporation imports a specialized machine that is disassembled and split into several shipments for delivery purposes. A specific tool is used to produce this machine, and the cost of that tool is added to the machine's value as an assist. USA Corporation decides to pay duties on the tool's entire value with the first shipment, rather than to split the tool's value between all of the machine's entries. What is the Customs term for this allocation of assists?

  1. AInclusion
  2. BDeduction
  3. CProration
  4. DApportionment
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(e)(1)

The correct answer is D) Apportionment, as defined in 19 CFR 152.103(e)(1), which explicitly states that the value of assists must be apportioned to imported merchandise in a reasonable manner. This aligns with the scenario where the tool’s value is allocated entirely to the first shipment, as permitted by the regulation. Inclusion (A) is not a term used in the cited authority; Deduction (B) contradicts the rule, which requires adding assist value rather than subtracting it; Proration (C) is not mentioned in the text and is not the term used by Customs for this process.

October 2025, Q69. Which of the following is a limitation on the use of transaction value for imported merchandise?

  1. AThe buyer's price of imported merchandise is contingent on the price at which the buyer sells other merchandise to the seller of the merchandise.
  2. BThe buyer's resale and use of imported merchandise is limited geographically by law.
  3. CThe buyer and seller are related; however, that relationship does not influence the price of the imported merchandise.
  4. DThe buyer is restricted from selling imported merchandise before a fixed date.
Show the answer and explanation
Correct answer: A  · Authority: 19 CFR 152.103(j); 19 CFR 152.103(k)

The correct answer is A because 19 CFR 152.103(k)(2)(ii) explicitly states that if the price of imported merchandise depends on the buyer selling other merchandise to the seller, transaction value cannot be accepted as the appraised value. This directly matches option A, which describes a condition where the buyer’s price is contingent on selling other goods to the seller. Option B is incorrect because 19 CFR 152.103(k)(1) clarifies that geographic restrictions on resale do not disqualify transaction value if they do not substantially affect the merchandise’s value. Option C is incorrect because 19 CFR 152.103(l)(1) explicitly allows transaction value to be used even when the buyer and seller are related, provided the relationship does not influence the price. Option D is incorrect because 19 CFR 152.103(k)(1) and its interpretative note (i) permit restrictions like a fixed sale date if they do not affect the merchandise’s value.

October 2025, Q70. A shipment of 1,000 water bottles manufactured in Germany is entered at $20.00 per unit at the Port of Philadelphia. The water bottles were shipped from Hamburg to Philadelphia with a shipping cost of $300.00. On the invoice, a credit of $10,000.00 for a previous overpayment by the buyer has been applied to the selling price. The total due on the invoice is $10,300.00. What is the transaction value of the merchandise based on the provided information?

  1. A$10,000.00
  2. B$20,300.00
  3. C$10,300.00
  4. D$20,000.00
Show the answer and explanation
Correct answer: D  · Authority: 19 CFR 152.103(a)(2)

The correct answer is D) $20,000.00 because the transaction value is the price actually paid or payable for the merchandise, which is $20.00 per unit for 1,000 units, totaling $20,000. The $10,000 credit is a reduction in the selling price, not a deduction from the transaction value itself. The shipping cost of $300 is not part of the transaction value under 19 CFR 152.103(a)(2), as it is a separate expense. Options A and C incorrectly include the credit or total invoice amount, which are not the actual price paid for the merchandise. Option B adds the shipping cost to the net selling price, which is not required by the cited authority.

October 2025, Q72. Which of the following costs should NOT be added to the price actually paid or payable to determine the transaction value for an entry of handmade leather bags?

  1. AThe leather provided free of charge by the U.S. buyer to Italian designers who will make the bag
  2. BThe royalty fees the U.S. buyer is required to pay as a condition of the sale
  3. CThe shipping costs paid by the U.S. buyer to import the bags
  4. DThe amount of debt the U.S. buyers relieve for the Italian designers in exchange for the shipment of the bags
Show the answer and explanation
Correct answer: C  · Authority: 19 CFR 152.103(b)(1); 19 CFR 152.102(f)

The correct answer is C because shipping costs paid by the U.S. buyer to import the bags are excluded from transaction value under 19 CFR 152.103(b)(1), which explicitly states that C.I.F. charges (including ocean freight and insurance) are not added to the price actually paid or payable. Option A involves leather provided free of charge, which may be considered part of the transaction if it is a consideration for the sale, as indirect payments or adjustments are generally included. Option B, royalty fees required as a condition of the sale, are included under the transaction value rules. Option D, debt relief, is treated as an indirect payment and is added to the price, as noted in 19 CFR 152.103(b)(2).

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