Assume That Subsidiaries X and Y Often Trade with Each

question 45

Multiple Choice

Assume that Subsidiaries X and Y often trade with each other. Assume that Subsidiary X has excess cash while Subsidiary Y is short on cash. How can Subsidiary X help out Subsidiary Y?

• A) X should lag its payments sent to Y to pay for imports from Y.
• B) X should request that Y lead its payments to be sent for goods that Y sent to X.
• C) A and B
• D) None of the above

---

Definitions:

Double-declining-balance

A method of accelerated depreciation where the depreciation expense decreases over time, doubling the rate of straight-line depreciation.

Salvage Value

The forecasted resale price of an asset at the end of its service life.

Depreciation Expense

An accounting method used to allocate the cost of a tangible or physical asset over its useful life, reflecting wear and tear, deterioration, or obsolescence of the asset.

Straight-line Method

A method of calculating depreciation for an asset, spreading the cost evenly over its useful life.