A Fronting Loan Disguises the Identity of a Parent Multinational

question 30

True/False

A fronting loan disguises the identity of a parent multinational corporation that infuses money into a foreign subsidiary. This technique is intended to reduce the political risk of operating a subsidiary in a foreign country.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a framework of accounting standards, principles, and procedures used in the United States.

Income Statement Information

Income Statement Information includes the revenues, expenses, and profits or losses of a company over a specified period, depicting its financial performance.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, typically a fiscal quarter or year, resulting in a net profit or loss.

Profitability

The degree to which a business or activity yields profit or financial gain, measured by the ability to generate income greater than the related expenses.