1/ Imagine that you run a U.S. company based in New Jersey that lists only on the New York Stock exchange. Assume that the company has only one factory, located in New Jersey. All of the companys workers are paid in U.S. dollars and the company buys all of its materials from U.S. suppliers (and pays in dollars). Also, all of the companys other costs are paid for in U.S. dollars; however, assume that all of the countrys products are exported to Europe and that all of its sales are denominated in Euros. Further assume that all of these exports are sold by the company European sales office. This Office is a subsidiary of the U.S. Headquarters and consolidates its statements with the U.S. headquarters.

Questions: Assume that the dollar has been increasing in value against the Euro. For the U.S. company described above, what impact (if any) will the rising dollar have on the demand for the companys products? If the U.S. company described above sells to European companies on credit contracts denominated in Euros, what impact will the rise in the dollar have on the U.S. companys dollar valued Accounts Receivable? What is the reporting currency of the U.S. headquarters parent that lists on the NYSE. What is the functional current of the U.S. (headquarters) parent. What is the functional currency of the foreign (sales office) subsidiary?

2/ Imagine that you run a U.S. company based in New Jersey and lists only on the NYSE. Assume that the companys main headquarters is in New Jersey, but that its only factory is in Germany. Thus, all of the companys workers are paid in Euros and the company buys all of its materials from German firms (and pays Euros). Also, all of the companys (i.e. factorys) other costs are paid for in Euros. Also, assume that the companys German factory operates as a separate foreign subsidiary that consolidates its financial statements with the U.S. headquarters that lists on the NYSE.

Question: Assume that the dollar has been rising in value against the Euro. For the U.S. company described above, what impact will the rising dollar have on the demand for the companys products? If the U.S. company described above sells to German companies on credit contracts denominated in Euros, what impact will the increase in the dollar have on the U.S. companys Accounts Receivable? ? What is the reporting currency of the U.S. headquarters parent that lists on the NYSE. What is the functional current of the U.S. (headquarters) parent. What is the functional currency of the foreign subsidiary?