For a Recent Month,the Following Payments Matrix of Inter-Affiliate Cash

question 24

Multiple Choice

For a recent month,the following payments matrix of inter-affiliate cash flows was forecasted: $$\begin{array} { l c c c c } &&{ \text { Disbursernent From: } } \\\text { Receipts by: } & \text { France } & \text { Britain } & \text { U.S. } \\\text { France } && € 500 & € 800 \\\text { Britain } & £ 300 & & £ 400 \\\text { U.S. }& \$ 1,000 & \$ 500 &\end{array}$$ Use multilateral netting to find the net payment from the British affiliate to the U.S.affiliate.
The spot exchange rates are $1.20 = €1.00 and $1.80 = £1.00; affiliates get paid in home currency.

• A)$60
• B)$20
• C)$0
• D)none of the options

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Definitions:

Mark-to-Market

An accounting method that values assets and liabilities based on current market prices.

Real Actions

Legal procedures taken to determine the title to property, as opposed to personal claims against a person.

Accounting Actions

Activities or tasks performed by accountants or financial officers that relate to the process of recording, summarizing, and reporting financial transactions of a business.

Earnings Targets

Pre-determined goals for an organization's financial performance, often used to motivate and measure the effectiveness of management.