A Canadian Subsidiary of a U

question 38

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.

---

Definitions:

Minimum Contact Requirements

The legal standard that must be met for an out-of-state defendant to be sued in the plaintiff's state court under the jurisdiction of that court.

Personal Service

A type of business or service that is provided directly to individual customers, tailoring to their personal needs or requirements.

International Shoe Co. v. State of Washington

A landmark Supreme Court case establishing the standard for what constitutes sufficient minimum contacts within a state for the exercise of jurisdiction over an out-of-state defendant.

Appellate Courts

Courts that review and make rulings on appeals from lower court decisions, primarily focusing on issues of law rather than fact.