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- How important of international trade (imports and exports) to the world economy? What accounting issues arise for a company as a result of engaging in international trade (imports and exports)? Why might a company be interested in investing in an operation in a foreign country (foreign direct investment)?Direct foreign investment into the United States represents a ____. capital outflow trade outflow capital inflow trade inflowDescribe direct foreign investment process?
- Which cash flows are important for an overseas investment: those generated by the subsidiary in the country in which it operates or those sent to the parent firm in dollars?Functional currency is the currency that influences sales price, labour, material and other costs of a company’s goods and services. (a) Explain factors that should also be considered to determine the functional currency of a foreign operation. (b) Explain what will happen if a business transaction is denominated in foreign currency but reported in functional currency.How can a firm make a direct foreign investment?
- Describe the market for foreign investment.What are the relevant cash flows for an international investment:the cash flow produced by the subsidiary in the country whereit operates, or the cash flows in dollars that it sends to its parentcompany?Explain the following terms, Automatic route and government route in foreign investment.
- Which of the following is not a reason for U.S. firms operating in foreign markets? A.Better economic and political environment (in the U.S.) B.Less expensive labor C.Tax incentives D. To achieve international diversificationWhat are the relevant cash flows for an international investment—the cash flowsproduced by the subsidiary in the country in which it operates or the cash flows indollars that it sends to its parent company? Explain.“Countertrade is used as a substitute for foreign direct investment”. Discuss
