ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Q.6 plz help me.

6 A foreign operation has the following local inflation rates:
Year 1: 10%
Year 2: 20% Year 3: 30% Year 4: 10% Year 5: 15%
What is the applicable cumulative inflation rate that should be used for
reporting as of end of year 5.
What method will be used for remeasurement or translation of the foreign
operation's foreign currency financial statements.
7. XYZ, a US company has a subsidiary in Korea. The Korean sub sells
inventory to a Japanese company with the sale denominated in US dollars.
Between the date of sale and the date the receivable is collected the Korean
won strengthens 10% against the US dollar. Explain if there is a foreign
exchange gain or loss or no FX impact and why.
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Transcribed Image Text:6 A foreign operation has the following local inflation rates: Year 1: 10% Year 2: 20% Year 3: 30% Year 4: 10% Year 5: 15% What is the applicable cumulative inflation rate that should be used for reporting as of end of year 5. What method will be used for remeasurement or translation of the foreign operation's foreign currency financial statements. 7. XYZ, a US company has a subsidiary in Korea. The Korean sub sells inventory to a Japanese company with the sale denominated in US dollars. Between the date of sale and the date the receivable is collected the Korean won strengthens 10% against the US dollar. Explain if there is a foreign exchange gain or loss or no FX impact and why.
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