8968

International Accounting
Exam 2

see attached for questions

These are not short answers (last exam he stated he thought more thoughtful and detailed answers)

Each answer should be detailed and provide your reasoning

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International Accounting Second Exam May 6, 2018 Despite global economic improvement, we still see countries that suffer through periods of significant inflation (hyperinflationary) and a devaluation of their currency. If you are looking to acquire a company domiciled in such a country, what impact does it have on the possible transaction if the financial statements you are looking at are stated at traditional historical cost in local currency? You are the CFO of the acquiring company, how do you deal with the financial statements you are reviewing for purposes of the translation? Also, if the acquisition is successful, what would you need to do to fully consolidate a subsidiary in such a country in your future financial statements? You are the CEO of a US manufacturing company. You are being acquired by a large Japanese company who wants to incorporate your products as a component in their final products. They currently use the Kaizen Costing system and they have indicated that beginning next year, the US Company will use the same system. The CFO wants to understand better the differences and how it will change her responsibilities. How do you help her understand those differences? What plans would you make for the transition to Kaizen costing? The CFO of a domestic US company needs to begin purchases of raw material from a European company. The foreign supplier has indicated that they are interested only in transacting business in their local currency. As the audit partner on the US company audit, he has contacted you for advice. The facts are as follows: Purchases began 2 months ago and will continue on a monthly basis for the next year Payments are made 30 days from date of purchase in the supplier’s local currency The Board of the US Company refuses to speculate in currency hedges, so the instruments need to be perfect hedges. In the future, the US company may be selling to a customer in that country. But no immediate plans exist now. …

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Second-Exam.docx