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标题: Reading 24: Multinational Operations LOS d ~ Q35-37 [打印本页]

作者: mayanfang1    时间: 2009-1-17 15:58     标题: [2009] Session 6 - Reading 24: Multinational Operations LOS d ~ Q35-37

Q35. What will Jameson find to be the U.S. dollar impact of Kasamatsu's total selling expenses on WB's financial statements (in thousands of dollars)?

A)   $3,220.

B)   $3,450.

C)   $4,150.

Q36. The Herlitzka Company, a U.S. multinational firm, has a 100% stake in a Swiss subsidiary. The U.S. dollar (USD)

     has been determined to be the functional currency. All the common stock of the subsidiary was issued at the

     beginning of the year and the subsidiary uses the weighted-average inventory cost-flow assumption. In addition,

     the value of the SF is as follows:

Beginning of year

$0.5902

Average throughout the year

$0.6002

End of year

$0.6150

The SF-based balance sheet and income statement data for the Swiss subsidiary are as follows:

Accounts receivable

= 3,000

Inventory

= 4,000

Fixed assets

= 12,000

Accounts payable

= 2,000

Long-term debt

= 5,000

Common stock

= 10,000

Retained earnings

= 2,000

Net income

= 2,000

The total value of net monetary assets is equal to:

A)   -4,000 SF.

B)   12,000 SF.

C)   3,000 SF.

Q37. Dell Air Lines has recently acquired Australian Puddle Jumpers, Inc., a small airline located in Sydney. The Australian dollar

     has been chosen by Dell as the functional currency for APJ. The Balance Sheet of APJ is given below as of Dec. 31, 2004 in

     Australian dollars.

Assets

 

Liabilities and Equity

Cash

$200

 

A/P

$180

A/R

240

 

Common Stock

720

Maintenance Supplies

180

 

 

 

Fixed Assets

280

 

 

 

Total Assets

$900

 

Total Liab & Equity

$900

APJ's income statement for the year ending Dec. 31, 2005 is expressed in Australian dollars as:

Sales

3,500

Total Costs

2,900

Net Income

600

The Australian dollar has steadily depreciated against the U.S. dollar. At Dec. 31, 2004, the exchange rate was 2 Australian dollars = $1 but at Dec. 31, 2005, the exchange rate had deteriorated to 3 Australian dollars = $1.

The Dec. 31, 2005 Balance Sheet for APJ is given in Australian dollars as follows:

Assets

 

Liabilities and Equity

Cash

441

 

A/P

210

A/R

330

 

Common Stock

720

Supplies

291

 

Retained Earnings

600

Fixed Assets

468

 

 

 

 

 

 

 

 

Total Assets

1,530

 

Total Liab. & Equity

1,530

On APJ's 2005 income statement, the level of sales in U.S. dollars would be:

A)   $1,750.

B)   $1,400.

C)     $1,167. B)


作者: mayanfang1    时间: 2009-1-17 15:59

答案和详解如下:

Q35. What will Jameson find to be the U.S. dollar impact of Kasamatsu's total selling expenses on WB's financial statements (in thousands of dollars)?

A)   $3,220.

B)   $3,450.

C)   $4,150.

Correct answer is B)

Total selling expenses include cost of goods sold, depreciation, and SG&A. Kasamatsu reported a total of JP 483,000. Since these are all income statement items they must all be translated at the average 2002 exchange rate of 140 JP/US$. Therefore, the calculation is:

483,000

140

= 3,450

Both remaining answers use incorrect exchange rates.

Q36. The Herlitzka Company, a U.S. multinational firm, has a 100% stake in a Swiss subsidiary. The U.S. dollar (USD)

     has been determined to be the functional currency. All the common stock of the subsidiary was issued at the

     beginning of the year and the subsidiary uses the weighted-average inventory cost-flow assumption. In addition,

     the value of the SF is as follows:

Beginning of year

$0.5902

Average throughout the year

$0.6002

End of year

$0.6150

The SF-based balance sheet and income statement data for the Swiss subsidiary are as follows:

Accounts receivable

= 3,000

Inventory

= 4,000

Fixed assets

= 12,000

Accounts payable

= 2,000

Long-term debt

= 5,000

Common stock

= 10,000

Retained earnings

= 2,000

Net income

= 2,000

The total value of net monetary assets is equal to:

A)   -4,000 SF.

B)   12,000 SF.

C)   3,000 SF.

Correct answer is A)

The basis for using the all current method is when Functional Currency is NOT the same as Parent's Presentation (reporting) Currency. The basis for using the temporal method is when Functional Currency = Parent's Presentation Currency.

Monetary assets and liabilities include cash, A/R, A/P and Long-term debt. Hence, net monetary assets is equal to 3,000 − (2,000 + 5,000) = -4,000 SF.

Q37. Dell Air Lines has recently acquired Australian Puddle Jumpers, Inc., a small airline located in Sydney. The Australian dollar

     has been chosen by Dell as the functional currency for APJ. The Balance Sheet of APJ is given below as of Dec. 31, 2004 in

     Australian dollars.

Assets

 

Liabilities and Equity

Cash

$200

 

A/P

$180

A/R

240

 

Common Stock

720

Maintenance Supplies

180

 

 

 

Fixed Assets

280

 

 

 

Total Assets

$900

 

Total Liab & Equity

$900

APJ's income statement for the year ending Dec. 31, 2005 is expressed in Australian dollars as:

Sales

3,500

Total Costs

2,900

Net Income

600

The Australian dollar has steadily depreciated against the U.S. dollar. At Dec. 31, 2004, the exchange rate was 2 Australian dollars = $1 but at Dec. 31, 2005, the exchange rate had deteriorated to 3 Australian dollars = $1.

The Dec. 31, 2005 Balance Sheet for APJ is given in Australian dollars as follows:

Assets

 

Liabilities and Equity

Cash

441

 

A/P

210

A/R

330

 

Common Stock

720

Supplies

291

 

Retained Earnings

600

Fixed Assets

468

 

 

 

 

 

 

 

 

Total Assets

1,530

 

Total Liab. & Equity

1,530

On APJ's 2005 income statement, the level of sales in U.S. dollars would be:

A)   $1,750.

B)   $1,400.

C)     $1,167. B)

The basis for using the all current method is when Functional Currency is NOT the same as Parent's Presentation (reporting) Currency. The basis for using the temporal method is when Functional Currency = Parent's Presentation Currency.
Since the Australian $ is both the local and the functional currency, use the current rate method. The items in the income statement are translated at the average exchange rate under FASB 52. The average rate is (2 + 3) / 2 = 2.5 Australian dollars = $1.

Income Statement (in $)

Sales (3,500 / 2.5)

$1,400

Costs (2,900 / 2.5)

$1,160

Net Income

$240


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