Multinational operations- transfer prices

In the chapter multinational operations, there is a concept called transfer prices where they speak about parent company buys and sells goods to the subsidiary (Foreign). How is that a possibility? If the parent and subsidiary’s books are consolidated it means that it is a business combination (merger/acquisition/consolidation) and under business combinations, transfer of goods are not allowed. So how does the transfer prices concept work? Hoping for someone to clear this doubt