Which of the following is true? The component of the current account include direct foreign investment and portfolio investment. The transaction regarding an Australian consulting firm receiving AUD5 million (i.e., Australian 5 million dollars) for consulting services provided to a German company is recorded as a debit under the current account of Australia. The transaction regarding a U.S. citizen receiving an interest payment as a result of his investment in a bond of a British firm issued in the United Kingdom is recorded as a credit under the current account of U.S.. When the BOP (balance of payment) accounts are recorded correctly, by BOP identity, under purely floating exchange rate regime, BCA (balance of current accounts)+BKA (balance of capital accounts) = - BRA (Balance of official reserve accounts),
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- XYZ is a German Company that has its foreign affiliation in Oman as Watiyyah Inc. The functional currency of Oman is OMR. The reporting currency for XYZ is EUR. The company shows the below accounts: Cash (OMR 15000), Capital (OMR 75000), Accounts Receivable (OMR 30000), Long Term Debt (OMR 10000), Accounts payable (OMR 25000), Land and Building (OMR 25000), Inventory (OMR 40000), Prepare the balance sheet of Watiyyah Inc. Translate the above balance sheet into EUR using the temporal method using the below exchange rates: The current exchange rate is OMR 0.4350/EUR The historical exchange rate is OMR 0.4060/EURWhich of the following items is a "debit" item in a country's balance-of payments accounts? a. exports of services b. increased holdings of domestic bonds by foreigners c. exports of merchandise d. an increase in a domestic citizen's bank aaccount in a foreign bankExplain how a U.S. corporation could hedge net receivables in Malaysian ringgit with a forward contract. Explain how a U.S. corporation could hedge payables in Canadian dollars with a forward contract.
- (b) Kenduri Co is considering whether or not to manage the foreign exchange exposure by using multilateral netting from the UK, with the Sterling Pound (£) as the base currency. Multilateral netting is undertaken in order to show the cash flow transaction. The following cash flows between Kenduri with three subsidiaries; Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are the details of cash flow transactions: Owed by Kenduri Owed to Lakama Jaia Amount US$ 4.5 million CAD 1.1 million Kenduri Kenduri Gochiso JPY 180 million Gochiso Jaia CAD 3.2 million Gochiso Lakama US$ 1.4 million Gochiso Kenduri GBP 25 million Jaia Lakama US$ 1.5 million Jaia Kenduri GBP 40 million Jaia Gochiso JPY 115 million Lakama Gochiso JPY 320 million Lakama GBP 2.1 million Kenduri Jaia Lakama CAD 2.5 million Calculate the impact of undertaking multilateral netting by Kenduri Co and its three subsidiary companies for the cash flows due in three months if the exchange rate is $1.5938/£,…(b) Kenduri Co is considering whether or not to manage the foreign exchange exposure by using multilateral netting from the UK, with the Sterling Pound (£) as the base currency. Multilateral netting is undertaken in order to show the cash flow transaction. The following cash flows between Kenduri with three subsidiaries; Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are the details of cash flow transactions: Owed by Kenduri Owed to Lakama Jaia Amount US$ 4.5 million CAD 1.1 million Kenduri Kenduri Gochiso JPY180 million Gochiso Jaia CAD 3.2 million Gochiso Lakama US$ 1.4 million Gochiso Kenduri GBP 25 million Jaia Lakama US$ 1.5 million Jaia Kenduri GBP 40 million Jaia Gochiso JPY 115 million Lakama Gochiso JPY 320 million Lakama GBP 2.1 million Kenduri Jaia Lakama CAD 2.5 million Calculate the impact of undertaking multilateral netting by Kenduri Co and its three subsidiary companies for the cash flows due in three months if the exchange rate is $1.5938/£,…From the following, please identify the 2 statements that are true as well as the 2 statements that are false. A) The global integration of capital markets is a major force leading to the convergence of accounting standards. B) Ericsson, the Swedish MNE, was required as of 2005 to adopt both Swedish and U.S. GAAP since it lists it securities in both the U.S. and Sweden. C) When using the current-rate method to translate foreign currency financial statements into the parent currency, translation gains and losses are recognized in comprehensive income. D) The balanced scorecard approach is a preferred method for measuring performance among U.S. firms, but the EU does not allow its usage.
- If US residents receive income from their foreign investments, it is counted on the US balance of payment account as: O A. Debit in the U.S. capital account. O B. Debit in the U.S. financial account. C. Credit in the U.S. financial account. D. Credit in the U.S. current account.1. On November 1, 2020, an entity acquired on account goods from a foreign supplier at a cost of $3,000. The accounts payable are paid on January 30, 2021. On December 1, 2020, an entity sold on account goods to a foreign customer at a selling price of $2,500. The accounts receivable is collected on February 28, 2021. The entity is operating in Philippine economy wherein the functional currency is the Philippine Peso. The following exchange rates are provided Buying spot rate Selling spot rate November 1, 2020 P40 P42 December 1, 2020 39 40 December 31, 45 45.5 2020 January 30, 2021 45.5 46 February 28, 2021 46 46.5 What is the carrying amount of monetary asset on December 31, 2020?Translate the foreign currency financial statements below using the current rate (functional) method. Assume the company was incorporated, began business, and became subsidiary of an US firm on January 1, 2016, and the foreign currency was the functional currency. Date January 1, 2016 January 1, 2019 March 31, 2019 Rate 1 FC=$0.10 1 FC=$0.20 1 FC=$0.25 1 FC=$0.40 1 FC=$0.30 December 31, 2019 Weighted average for 2019 Financial Statements of Street Corporation for the year ended December 31, 2019 FC Rate Dollars Income Statement Net sales Costs and expenses Net income 10,000,000 8,000,000 2,000,000 Statement of Retained Earnings Beginning retained earnings 8,000,000 2,000,000 10,000,000 1,000,000 9,000,000 1,600,000 Net income Subtotal Dividends (declared March 31) Ending retained earnings Balance Sheet Assets Current assets Fixed assets (acquired 1/1/2016) Total assets 13,000,000 82,000,000 95,000,000 Liabilities and stockholders' equity Current liabilities |Long-term debt |Common…
- What is the contribution to the asset base of the following items under the Basel III requirements? $7 million commercial letter of credit to a foreign bank, OECD CRC rated 2. $3 million five-year loan commitment to a foreign government, OECD CRC rated 1. $8 million bankers’ acceptance conveyed to a U.S. AA rated corporation.A German MNC, exports to, and imports from Australia. The MNC has accounts receivable totaling AUD178 million, accounts payable of AUD183 million and AUD-denominated debt of AUD95 million. Its transaction exposure denominated in Euros is: O a EUR90 million O b. -EUR100 million O. None of the options in this question are correct O d. EUR266 milliona) Differentiate between the different types of foreign exchange exposure that multinational companies usually face when engaging in cross-border transactions. b) Assume that the one-year interest rate is 3% (per annum) in the UK and 2% (per annum) in the Euro area. Also, assume that the current spot exchange rate of one pound to the euro is €1.1500/£ and that the corresponding one-year forward rate is €1.1400/£. i) Provide calculations to show whether the Interest Rate Parity (IRP) theory holds. ii) A UK-based investor has £200,000 to invest for a year either in the Euro area or the UK. Using the above information, determine which investment will generate a higher return for them. iii) Discuss the extent to which your results in i) and ii) above provide support to the Covered Interest Rate Parity (CIRP) condition.