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 discuss the pros and cons of using nonhuman animals in

1. Discuss the pros and cons of using nonhuman animals in behavioral research. 2. What are some examples of scientific misconduct?

In practice how could you measure that much stretch in a

In practice, how could you measure that much stretch in a bolt of this size? The bolt of problem 1 is put in service and its temperature rises to 2508F. How much change in length of the bolt would you expect this increas ...

Budgetsmith manufacturing inc has asked for your assistance

Budget Smith Manufacturing, Inc. has asked for your assistance in preparing a budget for next year's operations. Take a few moments to consider where you would begin the budgeting process.What types of information do you ...

1 what is the source of most hazardous materials incidents2

1. What is the source of most hazardous materials incidents? 2. List and describe four categories of weapons of mass destruction. 3. What six steps are common to most risk assessment methodologies? 4. Name several of the ...

A borrower is making a choice between a mortgage with

A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $200,000 at 6 percent interest for 20 years. a. How would you analyze these alternatives? b. What if the biwee ...

Problems about the ability of borrowers to meet mortgage

Problems about the ability of borrowers to meet mortgage payments and the evolution of fixed interest rate mortgages with various payment patterns were discussed. Why didn't this evolution address problems faced by lende ...

Hypochondriacs are obsessed with their health talk a great

Hypochondriacs are obsessed with their health, talk a great deal about their real and imagined health problems, and visit their physician frequently. Imagine that you developed an 8-item self-report measure of hypochondr ...

Accounting statements can be manipulated please try to give

Accounting statements can be manipulated. Please try to give an argument pro and con on this ethical issue. Any actual public examples you would like to cite would be most appreciated by all. Scenario: Many brokerage fir ...

1 what benefits do flexible unit-load materials have in

1. What benefits do flexible unit-load materials have in contrast to rigid containers? How do return or reverse logistics considerations impact the two approaches? 2. What trade-offs are involved in the use of returnable ...

1 what type of portfolio should a new college graduate

1. What type of portfolio should a new college graduate start to build? Briefly explain what types of assets may be good choices to include in a portfolio for these investors. 2. Explain why each of the following changes ...

  • 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