International Accounting And Multinational Enterprises 5th Edition Lee H. Radebaugh, Sidney J. Gray, Jeffrey S. Arpan - Solutions

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What can Uplift International Ltd. do to resolve the intra-Brazilian government conflict between the tax and customs authorities?
In situations in which some countries will not allow subsidiaries to pay the parents for such allocations, how should a parent handle these “debts”? How should it handle the complaints of the other governments, such as those of Canada in this specific case, which do allow the allocation but
If a company is justified in allocating overhead, R&D, and other similar expenses to its subsidiaries, what would be the most equitable method of doing so?
Was Uplift justified in attempting to allocate to its subsidiaries, through increased trans¬ fer prices, the development costs of the new engines? Would it be justified in allocating to its subsidiaries R&D costs of projects that ultimately did not result in any commercial application by the
Should the old evaluation method be changed for the Peruvian operation? If so, why and how?
What factors should Niessen consider in deciding whether to change the company’s method of performance evaluation?
What were the strengths and weaknesses of Niessen Apparel’s original method of per¬ formance evaluation?
Use the data and questions in Exercise 1, but change the exchange rate as follows:FF7.6 Exchange rate when the budget was established FF7.8 Projected exchange rate FF7.5 Actual exchange rate during March 2001 5,200 units actually sold
MultiCorp is a French-based company with operations in the United Kingdom. In determining the budget for 2001, MultiCorp looks at its historical performance in the United Kingdom and notes that for March 2000, its operations were as follows:Number of units sold 5,000 Direct cost of materials and
Discuss the advantages and problems of using the “Balanced Scorecard” approach to performance measurement.
What is EVA, and how can it be used in a global context?
What are some of the national similarities and differences in performance evalu¬ ation techniques?
Most companies use the same reports to evaluate the performance of the subsidiary and of subsidiary management. What are some of the dangers in doing this?
Which of the methods for setting the budget and monitoring performance as dis¬ cussed by Lessard and Lorange eliminate the impact of foreign exchange vari¬ ances? Which of those approaches would you prefer to use and why?
Should the local currency or the parent currency be used for performance evalu¬ ation? Explain your answer.
MNEs often transfer their domestic performance evaluation systems into the inter¬ national environment. Why is that the case? What problems could they encounter by using the same system?
How can management accounting play a role in the strategic planning process?
Should there be a specific monetary objective for the plan or would a nonquantitative objective be more appropriate?
What time period should be covered (short versus long term)?
How are the budget objectives set?
What style of communication (formal versus informal) should be used?
Who participates in the budget process and how?
Is there a formal budget-setting process?
Based on your answers to questions 1 and 2, should the Italian subsidiary be forced to adopt the Autoparts system as is, with modifications, or not at all?
Is the Autoparts policy of no exceptions, no excuses, a logical one? What factors argue for this policy and against it?
Is the Autoparts system of standardized reporting an intelligent one? What considera¬ tions support it and argue against it?
What implications does this proposed organization have on the control system of P&G?
How does the organizational structure compare with P&G’s competitors such as Unilever?
What were the costs and benefits of the proposed change?
Does the structure match any of the organizational models proposed in the chapter?
How did the strategy change P&G’s organizational structure?
What caused P&G to change their strategy?
Who are P&G’s major competitors? {Hint: You may wish to visit Unilever’s Web site www.unilever.com)
How has P&G’s interaction with the global business environment changed over time?
What are the nature and history of P&G’s business activities?
Hoeschst is a German chemical company operating in different product lines and different geographic areas. Its major business areas are chemicals (23 percent of sales), fibers (15 percent), polymers (17 percent), health (24 percent), engineer¬ ing and technology (15 percent), and agriculture (6
United Airlines entered into a strategic alliance with Thai Airways to develop and market airline services. Would you characterize this strategic alliance as a global innovator, an integrated player, a local innovator, or an implementer from the standpoint of United? What is your logic for your
Are “grease payments” unethical? Should MNEs refuse to pay them?
How important is the internal audit function?
What are some of the major ways that information technology is helping MNEs overcome the problems of time and space?
What role does MIS play? Do they have a Chief Information Officer? Do they have a Web site? How in depth do you consider it? You may wish to compare it with other sites.
Look at the annual report of an MNE. As you read about the product lines and geographical operations, what kind of organizational structure would you guess the company has?
The implication from the discussion in this chapter is that as a company becomes more global, it concentrates more on the informal and subtle mechanisms for con¬ trolling global operations than it does the structural and formal mechanisms. Why is this so? Do you think structural and formal
In 1989, Touche Ross merged with Deloitte Haskins 8c Sells to form Deloitte & Touche. What kinds of concerns might BCE have had when the merger was announced?
What are the major elements in the audit process that Touche Ross followed during its audit of BCE?
What are some of the major problems Touche Ross might have encountered in per¬ forming the audit of BCE in 1988?
What are the prospects of IFAC achieving its goal of worldwide reliability of finan¬ cial statements? Will IFAC’s Forum of Firms work? How will IFAD help?
The IFAC is attempting to harmonize auditing standards and practices. What do you think are some of the barriers to this harmonization effort? What are the ben¬ efits of their work being successful?
It was mentioned in the chapter that KPMG has reorganized itself around five national industry-focused teams that consist of assurance, tax, and consulting pro-fessionals concentrating on each industry. Why do you think KPMG moved to this type of organizational structure rather than remain
You have the opportunity to work on an internship in a foreign country for an audit firm with an office in that country. What would be the pros and cons of such an experience, and what would you do to prepare for that experience?
Why are the audits of most of the largest global companies done by the Big Five accounting firms?
What are some of the challenges global auditing firms face in trying to service their clients?
If you were a certified accountant in your home country and wanted to practice as an auditor in another country, it is unlikely that you would be allowed to practice right away. Why do these barriers to entry exist? What strategies could you pursue to service your clients in markets where you are
Discuss the personal qualifications, educational requirements, and experience requirements of three different countries. Develop a matrix that includes coun¬ tries down one side and the three dimensions just described across the top so you can compare and contrast the different countries.
What different approaches to measurement could be considered today by MNEs as desir¬ able alternatives or supplements to historical cost?
Discuss whether more MNEs should be encouraged to follow BP’s lead in disclosing replacement cost information.
Do you think BP should extend its replacement cost approach to the balance sheet? If so, why? If not, why not?
To what extent is BP’s replacement cost information likely to give a better insight into its underlying trading results and future prospects than historical cost information? Discuss this question with respect to the results:a. of the groupb. by business, andc. by geographical area
What is the meaning and significance of the stock holding losses for 1998 of $1,391 million?
What is the meaning and significance of the stock holding gains of $1,728 million iden¬ tified for 1999?
Why do you think BP would want to introduce replacement information into the pres¬ entation of its results?
In Germany, there is a resistance to any form of inflation accounting and a con¬ cern to maintain a strictly historical cost approach. Why is this, and can such an approach be justified on theoretical grounds?
Inflation in Russia and China has been relatively high in recent years, and yet no inflation accounting systems have been introduced. Should inflation accounting be required, and, if so, which approach would you recommend be used?
To what extent is a disclosure approach to inflation accounting likely to overcome problems of comparability internationally?
Under what circumstances are corporations likely to voluntarily disclose the impact of price changes and inflation?
Explain how Philips (the Netherlands) determined current costs for its financial reports. What were the reasons given for reverting to historical cost in 1992? Was this decision justifiable in your opinion?
Compare and critically comment on the philosophies behind the following:a. General purchasing powerb. Current value accountingc. Current value-general purchasing power (real value) accounting
How do price changes and inflation affect the financial position and performance of a corporation? What operational problems does inflation create for manage¬ ment?
Which translation methodology do you think Ace should use, and why?
Assume that Ace uses the other translation methodology allowed by FASB’s Statement 52.How would that change the facts in the case?
Which translation methodology did Ace use to translate Kamikaze’s financial statements into dollars? Explain how you know that.
Explain how Coca-Cola could use the translation methodology that it does and still have exchange gains and losses that show up in income as explained by them in the last para¬ graph above.
Given the methodology they use, would you expect them to have translation gains or losses in 1997? In 1998? In 1999? Can you find any information in the chapter to help determine their actual gains or losses in those years? Were your answers consistent with what actually happened to Coca-Cola
Which translation methodology or methodologies does Coca-Cola use?
XYZ Company, a manufacturer of computer peripheries, assembles a particular product line at a wholly owned facility in Singapore. The product is designed at XYZ’s headquarters in the United States, but the different components used in the assembly process are manufactured throughout Asia and
Imperial Chemical Industries PLC (ICI) is a British chemical company that lists ADRs on the New York Stock Exchange. In its 1999 annual report, ICI identifies its policies for dealing with foreign exchange as follows:“Profit and loss accounts in foreign currencies are translated into sterling at
Why do you think most U.S. companies use the current rate method as allowed under Statement 52 when the only method allowed prior to that was the temporal method or some variation of that method?
Some might argue that Statement 52 is an international standard because FASB received a great deal of input from the IASC and from other countries while it was developing the standard. What are the strengths and weaknesses of this type of international collaboration? Does it weaken the LASC’s
Siemens is a German company that generates its revenues in energy, industry, information and communications, and health care. It has operations all over the world. In the notes to its financial statements, Siemens states:“Due to the weakness of the German mark relative to the British pound, the
RadCo International is a U.S. firm with a wholly owned subsidiary in Mexico that uses the dollar as its functional currency. The relevant facts in the case are as follows:Relevant Exchange Rates (Pesos/US$)Historical Rate 5.0000 December 31, 2000 8.5000 December 31, 2001 9.4900 Average during 2001
RadCo International is a U.S. firm with a wholly owned subsidiary in France. The basic assumptions involved in the French subsidiary and its interaction with the parent com¬ pany are as follows:a. The functional currency of the subsidiary is the French franc, and the financial statements have been
The following is an example of a U.S. company with a U.K. subsidiary:a. Was the U.S. dollar stengthening or weakening against the pound from the fourth quarter of 2000 to the first quarter of 2001? from the first quarter of 2001 to the first quarter of 2002?b. Was the temporal method or the current
Rouse Company, a developer of major shopping centers, built two shopping centers in Canada and financed more than 90 percent of the cost with a loan from Canadian lenders. The loan would be paid off with rental income from the shopping centers with no recourse to Rouse Company.a. Assume that Rouse
What have you learned about internal coordination when making decisions about which currency to use to denominate a foreign sale?
Given the financial and accounting complexities of shifting from a dollar to a yen-based transaction, should top management have allowed the sales staff to invoice in yen?
What are the pros and cons of each of the three approaches in question 3?
Compare the net cash receipts from the transaction on May 31 assuminga. no hedgeb. a forward contract hedgec. an options hedge
If they hedge the transaction with a forward contract, what would the journal entries be on January 1, March 31, and May 31? Assume that the discount rate is 6 percent per annum. Be sure to prepare a table showing fair values and period gains or losses.
If RadCo decides not to hedge the transaction, what would the journal entries be onJan¬ uary 1, March 31, and May 31?
In the chapter, we discussed how companies can use derivative financial instru¬ ments to hedge against a potential loss on a foreign currency receivable or payable. If there are possible losses from denominating receivables and payables in a foreign currency, why don’t firms insist that
Pick a foreign currency of your choice and graph the value of that currency against the U.S. dollar over the past 12 months. Based on what has happened to that exchange rate, describe the financial challenges facing an exporter from the country or an exporter to that country.
In May 2000, Nissan announced that it was closing some factories in Japan and shifting production to the United States to shelter itself from foreign exchange risks that it faces when exporting cars to the United States. Describe the risk that Nissan is concerned about. Describe the pros and cons
OnJanuary 1, XYZ, a U.S. company, purchased inventory from aJapanese supplier for ¥100,000,000, with payment to be made on February 28.At the same time, it decided to enter into a forward contract to hedge the yen liability. Assume the fol¬ lowing exchange rates relative to the transaction:¥110
On January 1, XYZ, a U.S. firm, borrows DM1,000,000 from a German bank for five years at 6 percent interest paid semiannually in deutsche marks. Principal does not have to be paid until the end of the loan. The principal is adjusted for any exchange rate changes every six months. Assume the
Assume the following spot exchange rates between the U.S. dollar and the British pound sterling:March 1 $1.4470 March 31 $1.4650 April 30 $1.4750 On March 1, XYZ, a U.S. company, buys goods from a British supplier for £1,000,000. Payment is to be made on April 30, and XYZ adjusts its financial
Assume the following spot exchange rates between the U.S. dollar and the British pound sterling:March 1 $1.4470 March 31 $1.4200 April 30 $1.4000 On March 1, XYZ, a U.S. company, buys goods from a British supplier for £1,000,000. Payment is to be made to XYZ on April 30, and XYZ adjusts its
Assume the following spot exchange rates between the U.S. dollar and the British pound sterling:March 1 March 31 April 30 $1.4470 $1.4650 $1.4750 On March 1, XYZ, a U.S. company, sells goods to a British importer for £1,000,000. Payment is to be made on April 30, and XYZ adjusts its financial
Assume the following spot exchange rates between the U.S. dollar and the British pound sterling:March 1 March 31 April 30$1.4470$1.4200$1.4000 On March 1, XYZ, a U.S. company, sells goods to a British importer for £1,000,000. Payment is to be made on April 30, and XYZ adjusts its financial
To what extent has Nestle voluntarily disclosed information beyond the requirements of IAS 14?
To what extent has Nestle complied with IAS 14?

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International Accounting And Multinational Enterprises 5th Edition Lee H. Radebaugh, Sidney J. Gray, Jeffrey S. Arpan - Solutions

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