A Canadian Subsidiary of a U

question 54

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 recoded only by the parent firm.

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Definitions:

Depleted Uranium

Uranium with a lower content of the fissile isotope U-235 than natural uranium, used in military projectiles and for shielding.

Nuclear Transmutation

The process by which the nucleus of one chemical element is changed into a nucleus of a different element, often by bombarding it with particles.

Pressurized Water Reactor

A type of nuclear reactor where water is used as both coolant and moderator, kept under high pressure to prevent it from boiling.

Boiling Water Reactor

A boiling water reactor is a type of nuclear reactor used for generating electricity in which water is allowed to boil in the reactor core, with the steam produced directly driving a turbine.