Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Part I

On August 1, 2008, William signed the non cancellable order to purchase machine from a company located in Japan. The contracted price was 6,000,000 yen, payable on January 31, 2009. The machine would be delivered to William on November 1, 2008.

In order to hedge against strengthening of the yen, William entered into forward exchange contract on August 1, 2008, to purchase 6,000,000 yen on January 31, 2009.

On November 1, 2008, the transaction date, the U.S. company received machine from the Japanese company. Spot and forward exchange rates on various dates follow:

                              Spot Rate  ($/1 yen)              Forward Exchange   Rate ($/1 yen)
                                  
                         
August 1, 2008              $0.0080                                        $0.0084
November 1, 2008          $0.0085                                        $0.0087
December 31, 2008        $0.0083                                         $0.0086
January 31, 2009            $0.0090

Prepare all journal entries in Microsoft Excel for William that pertains to acquisition of the machine and the forward exchange contract. Suppose a December 31 year-end.

Part II

As the international aspects of William’s business continue to expand, William purchases a controlling interest in Parisian Co., a French company located in Paris. Parisian has the euro as its local currency.

Your manager is vaguely aware that designation of functional currency for Parisian might have significant and potentially different consequences for the consolidated financial statements of the parent company and its foreign subsidiaries. Being mindful of the bottom line, your manager makes it clear to you that he or she will strongly prefer that you select the functional currency which will be likely to have the most favourable (or least negative) potential impact on consolidated net income.

Address the following specific points:

In which currency would the year-end consolidated financial statements be prepared?

Will the financial statements be translated or remeasured? How will you determine this? Describe the rationale for your answer.

How will an asset such as Buildings be accounted for using each method (translation vs. remeasurement)?

Provide succinct but complete communication and avoid the use of accounting jargon given the nature of the audience.

Cite any sources you use using the correct APA format on a separate page.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M93732

Have any Question? 


Related Questions in Basic Finance

1 list and briefly discuss the key features that

1. List and briefly discuss the key features that distinguish long-term debt issues from each other. 2. Define the following: term loan, balloon payment, collateral, and stock purchase warrants. 3. What is a syndicated l ...

What is an efficient market why do efficient markets

What is an efficient market? Why do efficient markets benefit society? Define arbitrage and the law of one price. What role do they play in our market system? What do we call the "one price" of an asset? Suppose you are ...

A neutron causes 83211bi to change according to the

A neutron causes 83 211 Bi to change according to the following reaction: 0 1 n + 83 211 Bi → Z A X + γ The Z A X nucleus subsequently undergoes β - decay, and its daughter does too. What is the atomic number of the fina ...

1 discuss the risks or benefits to the exporter and

1. Discuss the risks or benefits to the exporter and important contrasting accounts receivable financing and factoring. 2. Discuss the role of the factor for the exporter. How does the factor help an exporter? 3. Contras ...

Introduction to corporate finance case work sources of

Introduction to Corporate Finance Case Work: Sources of Finance The task is to analyze available sources of finance for a selected SME entity. (1 SME company) What sources of finance are available for the selected entity ...

1 why should researchers never use the one-group

1. Why should researchers never use the one-group pretest-posttest design? 2. What threats to internal validity are present when the nonequivalent control group posttest-only design is used? Which of these threats are el ...

What factors would determine whether a particular strategy

What factors would determine whether a particular strategy is a hedge or a speculative strategy? How are spread and arbitrage strategies forms of speculation? How can they be interpreted as hedges? What are the differenc ...

Discuss the ways a firm could increase its cash balances eg

Discuss the ways a firm could increase its cash balances (e.g. float, etc.), why it may want to do so and where it could invest the funds.

How does the value of an unlevered firm change if it takes

How does the value of an unlevered firm change if it takes on debt in the presence of corporate taxes? Repeat the analysis for ANF from the previous problem, after relaxing only the "no corporate tax" assumption of perfe ...

During a congressional committee hearing at which goldman

During a Congressional Committee hearing at which Goldman Sachs CEO Lloyd Blankfein testified, Senator David Pryor of Arkansas asked Blankfein, "Why would clients believe in Goldman Sachs?" Blankfein replied that Goldman ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen