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:

Obsessive-Compulsive Disorder

A mental disorder characterized by unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Germs

Microorganisms, especially those that cause disease.

Obsessions

Recurrent and persistent thoughts, urges, or images that are experienced as intrusive and unwanted, causing significant anxiety or distress.

Compulsions

Compulsions are repetitive behaviors or mental acts that a person feels driven to perform in response to an obsession, or according to rules that must be applied rigidly, aimed at preventing or reducing distress or a dreaded event or situation.