Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 19.4, Problem 19.9RQ
Summary Introduction
To discuss: The
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Which of the following considerations would not be relevant in
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The currency that influences the costs of entity
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The currency in which receipts from operating activities are retained
O The currency in which finance or fund is generated
What are the relevant cash flows for an international investment—the cash flowsproduced by the subsidiary in the country in which it operates or the cash flows indollars that it sends to its parent company? Explain.
Which cash flows are important for an overseas investment: those generated by the subsidiary in the country in which it operates or those sent to the parent firm in dollars?
Chapter 19 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 19.1 - Prob. 19.1RQCh. 19.1 - Prob. 19.2RQCh. 19.1 - Prob. 19.3RQCh. 19.1 - Prob. 19.4RQCh. 19.2 - Under FASB No. 52, what are the translation rules...Ch. 19.3 - Prob. 19.6RQCh. 19.3 - Explain how differing inflation rates between two...Ch. 19.3 - Discuss macro and micro political risk. What is...Ch. 19.4 - Prob. 19.9RQCh. 19.4 - Prob. 19.10RQ
Ch. 19.4 - Prob. 19.11RQCh. 19.4 - Prob. 19.12RQCh. 19.5 - Prob. 19.13RQCh. 19.5 - Prob. 19.14RQCh. 19.5 - Prob. 19.15RQCh. 19.6 - Prob. 19.16RQCh. 19 - Prob. 19.1WUECh. 19 - Prob. 19.2WUECh. 19 - Prob. 19.3WUECh. 19 - Prob. 19.4WUECh. 19 - Prob. 19.5WUECh. 19 - Prob. 19.1PCh. 19 - Prob. 19.2PCh. 19 - Prob. 19.3PCh. 19 - ETHICS PROBLEM Is there a conflict between...
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- Cash presents special internal control challenges. How do internal controls for cash differ for accounting systems reporting under IFRS versus U.S. GAAP? How do the procedures applied differ across those two accounting systems?arrow_forwardDiscuss two general functions involved in international cash management and explain how the MNC’s optimization of cash flow can distort the profits of a subsidiary that is based in North America.arrow_forwardWhat term is used to describe the process of reducing foreign exchange risk? Choose the correct. A)international accounting B)exposure C)hedging D)harmonizationarrow_forward
- 1. For reporting purposes, currencies are defined as Operating, International and presentation Domestic and international Foreign, functional and presentation International and functional 2. The functional currency is Currency in which the entity reports earnings. The currency in which the entity primarily operates. The currency in which the entity presents the financial statements. The currency in which the entity primarily conducts banking activities 3. Which consideration would not be relevant in determining the entity's functional currency? The currency in which receipts from operating activities are retained. The currency in which finance or fund is generated The currency that influences the cost of the entity. The currency that the most internationally acceptable for trading 4. Under IFRS, how is presentation currency defined? The currency in which the financial statements are presented. The currency that uses the current rate The currency of…arrow_forwardWhat are the circumstances under which the capital expenditure of a foreign subsidiary might have a positive NPV in local currency terms but be unprofitable from the parent firm’s perspective?arrow_forwardAssume that a subsidiary operated in a foreign country, keeps its accounting records in a foreign currency that captures the underlying economics of the subsidiary, and operates independently of the parent company. Which if the following is true? Translation adjustments have an immediate effect on cash flows Translation adjustments should be reflected in earnings a. No No b. No Yes c. Yes No d. Yes Yesarrow_forward
- Q1. Explain the differences between translation and remeasurement of financial statements of a foreign subsidiary.arrow_forwardWhich of the following suggests that the foreign entity's functional currency is the parent's currency? a. Intercompany transaction volume is low. b. Debt is serviced through local operations. c. There is an active and primarily local market. d. Sale prices are influenced by international factors.arrow_forwardIf you are the manager, you should understand which of the operations do not create benefit from depreciation of the firm's local currency. I. Borrowing in a foreign country and converting the funds to the local currency prior to the depreciation. II. Purchasing foreign supplies. III. Investing in foreign bank accounts denominated in foreign currencies prior to depreciation of the local currency. A. I, IV B. II, IV C. I, II D. II, IIIarrow_forward
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