Question
In: Finance
Most countries specify the translation method to be used by a foreign subsidiary based on its...
Most countries specify the translation method to be used by a foreign subsidiary based on its business operations or the functional currency. Explain both subsidiary characterization criteria and the one adopted in the United States.
Solutions
Expert Solution
Subsidiary characterization criteria :A foreign subsidiary business can be categorized as an integral foreign entity or a self sustaining foreign entity. An integrated foreign entity is one that operates as an extension of the parent and its business are interrelated with that of the parent. A self sustaining company is one which operates as an indepdent entity to that of the parent.
In the US if the foreign subsidiary's are maintained in the US dollars then translation is not required. If the financial statements of the foreign subsidiary are maintained in the local currency then they are translated using the current rate. If the financial statements are maintained in the local currency and US dollars is the functional currency then the financials are remeasured using the temporal method. If the financial statements of the foreign subsidiary are maintained in the local currency and neither the US dollar the functional currency, then the statements are first remeasured using the temporal method and then translated to dollars using the current rate.
jeff jeffy answered 1 year agoRelated Solutions
Vermont Co. has one foreign subsidiary. Its translation exposure is directly affected by each of...
Vermont Co. has one foreign subsidiary. Its translation
exposure is directly affected by each of the following, except: a.
the proportion of business conducted by the subsidiary. b. the
interest rate in the country of the subsidiary. c. the exchange
rate movements of the subsidiary's currency. d. its accounting
method.
Wiese Limited, a foreign subsidiary of U.S. based Wald Inc. operates primarily economically independent from its...
Wiese Limited, a
foreign subsidiary of U.S. based Wald Inc. operates primarily
economically independent from its parent company. When the exchange
rate was $1.30 per one British Pound Sterling (£), Wald Limited
purchased Inventory for £2,100 pounds. Wald resells one-third of
the inventory for £900 when the exchange rate was $1.26 per Pound
Sterling and another one-third for £900 when the exchange rate was
$1.28 per Pound Sterling. At the end of the reporting period, the
exchange rate is $1.29...
A foreign subsidiary of a U.S.-based company has been notified of a loss contingency with an...
A foreign subsidiary of a U.S.-based company has been notified
of a loss contingency with an estimated cost ranging between
$220,000 and $250,000 which is probable of resulting in an actual
loss. Each dollar amount within this range of cost is equally
likely of being the actual outcome.
According to IFRS, what is the amount recognized as a provision
for loss contingency?
Multiple Choice
No amount will be recorded but an amount will be disclosed in
the notes to the...
As of December 31, 2020 Big USA Company owns a foreign subsidiary (Taco) based in Mexico....
As of December 31, 2020 Big USA Company owns a foreign
subsidiary (Taco) based in Mexico. Big is in the process of
preparing consolidated financial statements and must translate the
trial balance of Taco to U.S. Dollars. Selected financial
information of Taco in pesos is presented below.
Pesos
Inventory
12/31/20
300,000
Purchases in
2020
2,600,000
Inventory
12/31/19
420,000
Equipment purchased as follows
1/1/18
250,000
Purchases during
2018
150,000
Purchases during 2019
350,000...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in
a foreign country on January 1, 2016. The following account
balances for the year ending December 31, 2017, are stated in
kanquo (KQ), the local currency:
Sales
KQ
150,000
Inventory (bought on 3/1/17)
75,000
Equipment (bought on 1/1/16)
50,000
Rent expense
10,000
Dividends (declared on 10/1/17)
20,000
Notes receivable (to be collected in 2020)
31,000
Accumulated depreciation—equipment
15,000
Salary payable
4,000
Depreciation expense
5,000
The following U.S.$ per KQ exchange rates...
??A? U.S.-based MNC has a foreign subsidiary that earns $ 252000 before local? taxes, with all...
??A? U.S.-based MNC has a foreign subsidiary that earns $ 252000
before local? taxes, with all the? after-tax funds to be available
to the parent in the form of dividends. The applicable taxes
consist of a 33 % foreign income tax? rate, a foreign dividend
withholding tax rate of 9.6 %?, and a U.S. tax rate of 30 %.
Calculate the net funds available to the parent MNC? if:
a.??Foreign taxes can be applied as a credit against the? MNC's...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in
a foreign country on January 1, 2016. The following account
balances for the year ending December 31, 2017, are stated in
kanquo (KQ), the local currency: Sales KQ 390,000 Inventory (bought
on 3/1/17) 214,500 Equipment (bought on 1/1/16) 98,000 Rent expense
26,000 Dividends (declared on 10/1/17) 32,000 Notes receivable (to
be collected in 2020) 55,000 Accumulated depreciation—equipment
29,400 Salary payable 8,800 Depreciation expense 9,800 The
following U.S.$ per KQ exchange rates...
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016....
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in
a foreign country on January 1, 2016. The following account
balances for the year ending December 31, 2017, are stated in
kanquo (KQ), the local currency: Sales KQ 190,000 Inventory (bought
on 3/1/17) 95,000 Equipment (bought on 1/1/16) 58,000 Rent expense
12,000 Dividends (declared on 10/1/17) 22,000 Notes receivable (to
be collected in 2020) 35,000 Accumulated depreciation—equipment
17,400 Salary payable 4,800 Depreciation expense 5,800 The
following U.S.$ per KQ exchange rates...
Measure the accounting for foreign currency and its translation. Scenario CM Corporation (CMC) was founded six...
Measure the accounting for foreign currency and its
translation.
Scenario
CM Corporation (CMC) was founded six years ago by Phil Connor
and Eric Martin. The company designs, installs, and services
security systems for high-tech companies. The founders, who
describe themselves as "entrepreneurial geeks," met in a computer
lab when they were teenagers and found they had common interests in
working on security systems for critical industries. CMC hired you
as a junior accountant this year.
Lately, Connor and Martin have...
Tax credits A U.S.-based MNC has a foreign subsidiary that earns $246,000 before local taxes, with...
Tax credits A U.S.-based MNC has a foreign
subsidiary that earns $246,000 before local taxes, with all the
after-tax funds to be available to the parent in the form of
dividends. The applicable taxes consist of a 32% foreign income tax
rate, a foreign dividend withholding tax rate of 9.2 %, and a U.S.
tax rate of 28%.
Calculate the net funds available to the parent MNC if:
a. If foreign taxes can be applied as a credit
against the...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Phil and Jim were roommates in college and have always competed against each other. Since graduating...
- Phil and Jim were roommates in college and have always competed against each other. Since graduating...
- In Community Health Planning, Can you provide me with several examples of population-level versus program level...
- Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual...
- Phil and Jim were roommates in college and have always competed against each other. Since graduating...
- HashMap is a Map based collection class that is used for storing Key & value pairs,...
- short answer on each questions. 1). which biome is found on the eastern USA? name and...
ADVERTISEMENT