52.
Walblue imports a desk from a French manufacturer for sale in its chain of U.S. stores. The
cost of a desk to Walblue is 3,700 euros (€). What is the dollar cost of one of these desks if
the exchange rate is currently 1.117 euros per U.S. dollar? (round to nearest cent)
53.
At the current exchange rate of $1.40 per British pound, a one-day pass to Worldwide
Theme Park of Florida sells for 45 pounds at travel agencies throughout Great Britain. If
the exchange rate increases to $1.70 per pound, what will happen to the price of a one-day
pass sold in Great Britain?
54.
Rochester, Inc. purchased cameras from a Japanese company at a price of 4 million yen.
On the purchase date, the exchange rate was $0.0100 per Japanese yen, but when
Rochester, Inc., paid the liability, the exchange rate was $0.0103 per yen. When this foreign
account payable was paid, Rochester, Inc., recorded a:
55.
Hayden, Inc. purchased knobs from a Greek company for 185,000 Euros. On the purchase
date the exchange rate was $0.80 per Euro, but when Hayden paid the liability, the
exchange rate was $0.70 per Euro. When this foreign account payable was paid, Hayden,
Inc., recorded a:
56.
Tuliptime, Inc. sold American fashions to a Japanese company at a price of 4 million yen.
On the sale date, the exchange rate was $0.0100 per Japanese yen, but when Tuliptime
received payment from its customer, the exchange rate was $0.0103 per yen. When the
foreign receivable was collected, Tuliptime:
57.
Barter Corp. sold American telecommunications equipment to a British company for
650,000 pounds. On the sale date, the exchange rate was $1.65 per British pound, but
when Barter received payment from its customer, the exchange rate was $1.60 per pound.
When the foreign receivable was collected, Barter Enterprises:
58.
Flynn Corporation purchased bicycles from a British manufacturer at a price of 45,000
British pounds on November 15, 2014 with payment due in 60 days. Using the following
exchange rates, what gain or loss from currency fluctuations should be recognized in 2014
and 2015, respectively?
59.
Exact Instruments sold equipment to a British research group at a price of 70,000 British
pounds on December 1, 2014 with payment due in 90 days. Using the following exchange
rates, what gain or loss from currency fluctuations should be recognized in 2014 and 2015,
respectively?
60.
Gains and losses from fluctuations in exchange rates should be shown on the:
61.
On November 1, a French company purchased machinery from an American company for
800,000 Euros when the exchange rate was $0.83. When preparing financial statements on
December 31, assuming the rate for Euros was $0.88, what amount of gain or loss should
the American company report?
62.
Assume the exchange rate for the Canadian dollar is rising relative to the U.S. dollar. An
American company will incur losses from this rising exchange rate if it is making:
63.
Assume the exchange rate for the Mexican Peso is falling relative to the U.S. dollar. An
American company will incur losses from this falling exchange rate if the company is
making:
64.
Blue Waters is an American company that does business with several Japanese
corporations. In recent months, Blue Waters has been reporting losses from increases in
the exchange rate of the Japanese yen. The majority of Blue Waters transactions with the
Japanese companies probably consist of:
65.
A corporation that uses a strategy of hedging all contracts specifying a foreign currency
(i.e. foreign accounts receivable and foreign accounts payable):
66.
Trente Switch and Signal sold equipment to a Canadian transportation company at a price
of 300,000 Canadian dollars with payment due in 60 days. On the date of sale, the
exchange rate was 1.50 Canadian dollars per U.S. dollar. Trente decided to hedge the risk
of currency fluctuations by purchasing 300,000 Canadian dollars with payment due in 60
days. If the exchange rate in 60 days is 1.25 Canadian dollars per U.S. dollar, Trente Switch
and Signal will:
67.
Samson Corporation buys a foreign currency future contract as a hedging strategy to
protect against possible losses from fluctuations in a particular foreign exchange. This
strategy suggests that Samson Corporation has:
68.
A contract giving the right to receive a specified quantity of foreign currency at a future
date is known as a:
69.
Of the following globalization strategies, which would be
least
demanding in terms of the
quantity and variety of accounting information required?
70.
Which of the following does
not
affect the cost associated with producing and selling goods
and services in global markets?
71.
Under the Foreign Corrupt Practices Act, American business firms are required to:
72.
The Foreign Corrupt Practices Act (FCPA) imposes _____ for managers who engage in
bribes.
15–33
73.
The Foreign Corrupt Practices Act (FCPA) affects all of the following
except
:
Essay Questions
74.
Accounting terminology
Listed below are nine technical accounting terms introduced in this chapter:
Each of the following statements may (or may not) describe one of these technical terms.
In the space provided below each statement, indicate the accounting term described, or
answer “None” if the statement does not correctly describe any of the terms.
_____ (a) The strategy of creating offsetting positions so that losses from currency
fluctuations will be offset by gains resulting from the same fluctuations.
_____ (b) The price of foreign currency, stated in terms of the domestic currency.
_____ (c) An item likely to appear in the income statements of American-based importers
when foreign exchange rates are rising.
_____ (d) The organization responsible for developing uniform worldwide accounting
standards.
_____ (e) Payments made to foreign officials to expedite paperwork.
_____ (f) The process of restating an amount of foreign currency in terms of the equivalent
number of U.S. dollars.
_____ (g) An item likely to appear in the income statements of American-based exporters
when foreign exchange rates are falling.