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

How would you identify the best nut factor for your

How would you identify the best nut factor for your application? How much torque would be required to tighten an ASTM A193 Gr. B16 bolt with a 31/4-8 thread to 60% of yield? Why does a wrench create a side load on the bo ...

1 which of the gaps in figure do you think represents the

1. Which of the gaps in Figure do you think represents the major problem for most firms? How can a company attempt to eliminate the knowledge gap? The communications gap? 2. Compare and contrast the customer service, cus ...

1 how does the cost of canying inventory impact the

1. How does the cost of canying inventory impact the traditional earnings statement of the enterprise? 2. Discuss the relationship between service level, uncertainty, safety stock, and order quantity. How can trade-offs ...

Suppose that you are a wheat farmer answer the following

Suppose that you are a wheat farmer. Answer the following questions. a. It is September, and you intend to have 50,000 bushels of wheat harvested and ready to sell in November. The current spot market price of wheat is $ ...

Explain why interest rate swaps are more widely used than

Explain why interest rate swaps are more widely used than currency and equity swaps? Explain how swaps are similar to but different from forward contracts? Suppose that a party engages in a swap, but before the expiratio ...

Beta ltd just paid a dividend of 040 and dividends are paid

Beta Ltd just paid a dividend of $0.40 and dividends are paid once a year. Dividends are expected to grow at 4% p.a. for each of the next five years and then to remain constant forever. Assume a required rate of return o ...

1 what is the advantage of using multiple measures for a

1. What is the advantage of using multiple measures for a single variable? What is the disadvantage? 2. Briefly explain how a ceiling effect (or floor effect) can affect the outcome of a research study.

The potential revenues of all projects are in fact

The potential revenues of all projects are in fact uncertain. The company determines that the revenue for project 1 is following a uniform distribution ranging from $1,200,000 to $2,000,000. The revenue for project 2 is ...

In late april 2010 apples stock was selling for more than

In late April 2010, Apple's stock was selling for more than $260 per share. The following appeared in a column in the Wall Street Journal, listing potential problems facing Apple that might cause the price of the firm's ...

A project has the following incremental cash flows for

A project has the following incremental cash flows for years zero through year 5, respectively: -$2,500, $800, $600, $700, $400 and $300. If the firm's cost of capital is 8%, according to the IRR decision rule, should th ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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