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:

Emotion Processing

The mechanism by which emotional information is analyzed, evaluated, and acted upon by an individual.

Neurons

Specialized cells in the nervous system that transmit information through electrical and chemical signals.

Impulses

Sudden, involuntary urges to act or respond quickly, often without thoughtful consideration of consequences.

Activate-Inhibit

A cognitive function involving the activation of relevant responses and suppression of irrelevant or inappropriate ones.