A US-Based MNC Has a Subsidiary in China Where the Local

question 77

Essay

A U.S-based MNC has a subsidiary in China where the local currency is the Renminbi (RMB). The balance sheets and income statements of the subsidiary are presented in the table below. On December 31, 2014, the exchange rate was 8.27 RMB/US$. Assume the local currency figures in the statement below remain the same on December 31, 2015. Calculate the U.S. dollar translated figures for the two ending time periods assuming that between December 31, 2014 and December 31, 2015, the Chinese government revalues (appreciates) the RMB by 20 percent.
Translation of Income Statement Translation of Balance Sheet

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Definitions:

Demographic Transition

A model representing the transition from high birth and death rates to lower birth and death rates as a country develops from a pre-industrial to an industrialized economic system.

Population Growth

The growth of a population's size over a period.

Global Resource Demand

The worldwide need or desire for resources such as energy, minerals, and agricultural products, driven by population growth and economic development.

Technological Progress

Advances in technology that improve the efficiency of production processes, leading to higher output with the same or lower input levels.