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Sharp Company Owns a Japanese Subsidiary, Whose Functional Currency Is

question 10

Multiple Choice

Sharp Company owns a Japanese subsidiary, whose functional currency is the U.S. dollar. On October 15, 20X5, when the rate of exchange was 121 yen to $1, the Japanese subsidiary declared and paid a dividend to Sharp of 24,000,000 yen. The dividend represented the net income of the foreign subsidiary for the six months ended June 30, 20X5, during which time the weighted average of exchange rates was 125 yen to $1. The rate of exchange in effect at December 31, 20X5, was 135 yen to $1. What rate of exchange should be used to translate the dividend for the December 31, 20X5 financial statements?

Recognize the importance of cultural and language differences in international business activities.

Understand the role of exchange rates in international trade.

Comprehend the implications of currency valuation changes on comparative advantages.

Calculate the cost of preferred stock.

Definitions:

Central Route

Part of the Elaboration Likelihood Model of persuasion, it involves thoughtful consideration of the arguments presented.

Postdecisional Dissonance

The psychological discomfort experienced after making a difficult decision, often leading to regret or rationalization of the choice made.

Social Psychology

The scientific study of how people's thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.

Episodic Memory

A form of long-term memory that is concerned with the recall of particular occurrences, settings, and personal experiences.