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 small savers can usually receive a higher interest rate

1. Small savers can usually receive a higher interest rate from money market mutual funds than from bank savings accounts. So, how are banks able to attract small savers? 2. Financial journalist David Wessel has describe ...

Your employer provides a 401k retirement plan and matches

Your employer provides a 401(k) retirement plan and matches 100% of your contributions up to 5%. Your annual income is $54,000 and you expect to earn an annualized 8.0% return on your investment. What is the value of you ...

1 what is the importance for an individual of understanding

1. What is the importance for an individual of understanding time value of money concepts? For a corporate manager? Under what circumstance would the time value of money be irrelevant? 2. From a time value of money persp ...

Consider a period in which the us dollar weakens against

Consider a period in which the US dollar weakens against most foreign currencies. How does this affect the reported earnings of a US-based MNC with subsidiaries all over the world? Consider a period in which the US dolla ...

Assume the sweatshirt test scores are normally distributed

Assume the sweatshirt test scores are normally distributed with a mean of 500 and a standard deviation of 100. (a) Consider all random samples of 100 test scores. What is the standard deviation of the sample means? (b) W ...

Discounted payback timeline manufacturing co management is

Discounted payback: Timeline Manufacturing Co. management is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $1,912,855, and project B's cost is $1,875,000. Cash ...

A company wants to enter into a commitment to initiate a

A company wants to enter into a commitment to initiate a swap in 90 days. The swap would consist of four payments 90 days apart with the underlying being LIBOR. Use the term structure of LIBOR as given below to solve for ...

1 what is a multiple baseline design and when are such

1. What is a multiple baseline design, and when are such designs typically used? 2. How do researchers analyze the data from single-case experiments? 3. In what areas have single-case experiments been primarily used?

Consider whether each of the following research reports

Consider whether each of the following research reports seems to describe an applied or a basic research project, and explain why: An experimental analysis of the impact of contingent reinforcement on salespersons' perfo ...

1 what are the advantages and disadvantages of usinga

1. What are the advantages and disadvantages of using (a) figures, (b) tables, and (c) text to report the results of experiments in the research report? 2. Differentiate between random sampling and random assignment. Whi ...

  • 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