A Canadian Subsidiary of a U

question 41

Multiple Choice

A Canadian subsidiary of a U.S. parent firm is instructed to bill an export to the parent in U.S. dollars. The Canadian subsidiary records the accounts receivable in Canadian dollars and notes a profit on the sale of goods. Later, when the U.S. parent pays the subsidiary the contracted U.S. dollar amount, the Canadian dollar has appreciated 10% against the U.S. dollar. In this example, the Canadian subsidiary will record a:

• A) 10% foreign exchange loss on the U.S. dollar accounts receivable.
• B) 10% foreign exchange gain on the U.S. dollar accounts receivable.
• C) Since the Canadian firm is a U.S. subsidiary, neither a gain nor loss will be recorded.
• D) Any gain or loss will be recorded only by the parent firm.

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Definitions:

Electroencephalograph

A medical instrument used to measure the electrical activity of the brain, often used in the diagnosis of conditions and the study of sleep and consciousness.

Light Sleep

A sleep stage characterized by low frequency and relatively easy arousal, often considered the first stage of the sleep cycle.

Core Body Temperature

The internal temperature of the body, which is closely regulated and necessary for proper physiological functioning.

Half-hour

A period of time equal to thirty minutes, often used to describe the duration of events or activities.