Elan,a USCorporation,completed the December 31,20X8,foreign Currency Translation of Its 70 Percent

question 31

Multiple Choice

Elan,a U.S.corporation,completed the December 31,20X8,foreign currency translation of its 70 percent owned Swiss subsidiary's trial balance using the current rate method.The translation resulted in a debit adjustment of $25,000.The subsidiary had reported net income of 800,000 Swiss francs for 20X8 and paid dividends of 50,000 Swiss francs on September 1,20X8.The translation rates for the year were:

The January 1 balance of the Investment in the Swiss subsidiary account was $1,600,000.Elan acquired its interest in the Swiss subsidiary at book value with no differential or goodwill recorded at acquisition.
Elan's Investment in Swiss subsidiary account at December 31,20X8,is:

• A) $1,881,050.
• B) $1,916,050.
• C) $1,923,950.
• D) $2,051,500.

Calculate the financial impact and feasibilities of implementing cash management tools such as lockbox services or changing investment compositions.

Acquire knowledge about the models and theories that help determine optimal cash balances and transaction costs, including BAT and Miller-Orr models.

Understand the significance of float in cash management and how it affects the firm's effective cash balance.

Recognize the implications of cash management decisions on a firm's opportunity costs and how it influences overall financial strategy.

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