Exam 15: Global Business and Accounting

Whenever an American corporation sells merchandise to a foreign company,the transaction must be stipulated in U.S.dollars.

As foreign exchange rates fall,importers based in the United States will lose and exporters will gain.

Payments made by American companies to motivate foreign officials to undertake actions more rapidly than they might otherwise are prohibited by the Foreign Corrupt Practices Act.

Walblue imports a desk from a French manufacturer for sale in its chain of U.S.stores.The cost of a desk to Walblue is 3,700 euros (€).What is the dollar cost of one of these desks if the exchange rate is currently 1.117 euros per U.S.dollar? (round to nearest cent)

In Japan,financial reporting requirements are based primarily on the need to provide information to:

Consider the following statement: "A strong dollar rose sharply against the British pound,but fell slightly against the Japanese yen." This statement indicates that:

To convert a dollar amount into a foreign currency divide the dollar amount by the exchange rate.

An exchange rate represents the price of one currency stated in terms of another.

Prepare journal entries for the following transactions for Inter-Global Co. October 10: Purchased merchandise on account from Le Monde,a French company,for 80,000 euros.The exchange rate was $0.82. November 2: Paid Le Monde for the merchandise purchased on October 1.The exchange rate at this date was $0.83. November 15: Sold merchandise to Nippon,a Japanese company for 300,000 yen on account.The rate of exchange was $0.0091. November 20: The Japanese company paid the full amount.The exchange rate was $0.0090. December 5: Sold merchandise to Ponti,an Italian company for $24,000.The exchange rate is $0.81.The Italian company agrees to pay in U.S.dollars. December 18: Collected the full amount from the Italian company when the exchange rate is $0.82.

A U.S.public corporation's decision to globalize impacts all of following except:

The standards issued by the International Accounting Standards Board must be followed by all multinational companies.

"Convergence" means changing the country's existing standards so that IFRS "equivalent" financial reports are produced.

Exchange rates and hedging On October 1 2015,Glenn Company accepted a shipment of beer from Germany.The purchase contract specifies payment of 3,000,000 euros is to be made on December 1,2015.The exchange rate on October 1,2015 was: $1 = 1.4 euros. Instructions: (a)If the exchange rate on December 1 2015 is: $1 = 1.18 Euros,what amount of gain or loss due to the exchange rate fluctuation will be recognized on the purchase? (b)On October 1,Glenn's analysts were forecasting the exchange rate to be: $1 = 1.20 Euros on December 1,2015.Glenn can enter into a hedging contract on October 1,2015 whereby the bank would accept $2,480,000 in exchange for 3,000,000 Euros on December 1.The bank will charge a $2,000 fee to enter into the agreement.Should Glenn enter into the hedge agreement? (c)If Glenn enters into the hedging contract,what will be the exchange gain/loss recorded on December 1,2015? (Do not round your intermediate computations and round final answers to nearest whole dollar.)

Generally accepted accounting principles (GAAP)in the United States are fully converged with International Financial Reporting Standards (IFRS).

The Foreign Corrupt Practices Act (FCPA)imposes _____ for managers who engage in bribes.

Tuliptime,Inc.sold American fashions to a Japanese company at a price of 4 million yen.On the sale date,the exchange rate was $0.0100 per Japanese yen,but when Tuliptime received payment from its customer,the exchange rate was $0.0103 per yen.When the foreign receivable was collected,Tuliptime:

Accounting terminology Listed below are nine technical accounting terms introduced in this chapter: Each of the following statements may (or may not)describe one of these technical terms.In the space provided below each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms. _____ (a)The strategy of creating offsetting positions so that losses from currency fluctuations will be offset by gains resulting from the same fluctuations. _____ (b)The price of foreign currency,stated in terms of the domestic currency. _____ (c)An item likely to appear in the income statements of American-based importers when foreign exchange rates are rising. _____ (d)The organization responsible for developing uniform worldwide accounting standards. _____ (e)Payments made to foreign officials to expedite paperwork. _____ (f)The process of restating an amount of foreign currency in terms of the equivalent number of U.S.dollars. _____ (g)An item likely to appear in the income statements of American-based exporters when foreign exchange rates are falling.

Of the following globalization strategies,which would be least demanding in terms of the quantity and variety of accounting information required?

Exact Instruments sold equipment to a British research group at a price of 70,000 British pounds on December 1,2014 with payment due in 90 days.Using the following exchange rates,what gain or loss from currency fluctuations should be recognized in 2014 and 2015,respectively?

Cultural traits in the United States include high uncertainty avoidance and a long-term orientation.