Review the operating data incorporated in Exhibit 10-3 for the Russian subsidiary of the U.S. parent company.

Required:

Using Exhibit 10-3 as a guide, prepare a cash flow report from a parent currency perspective identifying the components of the expected returns from the Russian investment for the first two years of its operations. The U.S. parent company is only allowed to receive 70 percent of its affiliate’s reported net income, after Russian corporate income taxes, as dividends. However, U.S. tax law provides a credit against U.S. taxes for any foreign income taxes paid.