(a) Net Income 2013 2014 Japanese Subsidiary JPY 1,501 1.469 British Subsidiary GBP 95.95 106.05 European Subsidiary EUR 197.62 207.77 Chinese Subsidiary CNY 166.09 200.73 Russian Subsidiary RUB 120.71 107.31 United States Subsidiary USD 362.78 386.08 (b) Exchange Rate 2013 2014 JPY = 1 USD 97.55 105.96 USD = 1 GBP 1.5678 1.6528 USD = 1 EUR 1.2629 1.3343 CNY = 1 USD 6.1678 6.1874 RUB = 1 USD 31.77 USD 1 1 38.57 Blundell Biotech. Blundell Biotech is a U.S.-based biotechnology company with operations and earnings in a number of foreign countries. The company's profits by subsidiary, in local currency (in millions) along with the average exchange rate for each year, by currency pairs, are shown in the table for 2013 and 2014. Use these data to answer the following questions. a. What was Blundell Biotech's consolidated profits in U.S. dollars in 2013 and 2014? b. If the same exchange rates were used for both yearswhich is often called a "constant currency basis" what was the change in corporate earnings on a constant currency basis? c. Using the results of the constant currency analysis in part (b), is it possible to separate Blundell's growth in earnings between local Consolidated profits or earnings is found by consolidating the converted profits in each foreign currency to U.S. dollars for that period. (This is simplified. Actual accounting practices would require the additional netting of any intra-company transactions resulting to eliminate any double-counting of profits.) Calculate the consolidated profits in U.S. dollars in 2013 and 2014 below: (Round to two decimal places) Net Income British Chinese Russian U.S. Consolidated Japanese Subsidiary European Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Earnings (USD) (2013) (2014) Change (%) Calculate the earnings from individual subsidiaries and consolidation below: (Round to two decimal places.) Net Income British Chinese Russian U.S. Consolidated Japanese Subsidiary European Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (USD) (2014) Change (%) (Select the best choice below.) O A. On a constant currency basis, all subsidiaries showed growth in profits except for the European and Russian subsidiaries. Fortunately for Blundell, neither of those subsidiaries is a major contributor to total profits. OB. On a constant currency basis, all subsidiaries showed growth in profits except for the Japanese and Chinese subsidiaries. Fortunately for Blundell, neither of those subsidiaries is a major contributor to total profits. O C. On a constant currency basis, all subsidiaries showed growth in profits except for the Japanese and Russian subsidiaries. Fortunately for Blundell, neither of those subsidiaries is a major contributor to total profits. OD. On a constant currency basis, all subsidiaries showed growth in profits except for the Chinese and Russian subsidiaries. Fortunately for Blundell, neither of those subsidiaries is a major contributor to total profits
