A Foreign Subsidiary with More Susceptible Expenses Than Revenue to Exchange

question 24

True/False

A foreign subsidiary with more susceptible expenses than revenue to exchange rate movements will be favourably affected by an appreciation of the foreign currency.

---

Definitions:

Foreign Corporation

A business entity that is incorporated under the laws of a country different from where it conducts its operations or has its principal business activities.

S Corporation Election

A tax election made by small business corporations with 100 shareholders or less to be taxed as a pass-through entity, avoiding double taxation on corporate income.

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, thus having a financial interest in the company's performance.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost of producing each additional unit decreases with the increase in total output.