3 Suppose you had invested $1 million in US fixed assets and in Italian fixed assets under...
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3 Suppose you had invested $1 million in US fixed assets and in Italian fixed assets under the following conditions:
US IT _PPUS _PPIT S($/¤) S1($/¤)
2% 4% 5% 4% 1.1500 1.1200 Assume that fixed-asset prices in local currency have kept pace with prices in general.
a Which investment yielded higher returns over the year?
b What will appear in the income statement and the shareholder equity account under the FAS 52 procedure?
c What should appear as income?
d Why does your answer to ‘‘b’’ (where income and shareholder equity are aggregated) disagree with your answer to ‘‘c’’?
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