Assume that a British parent company is trying to determine the appropriate transfer price for hi-tech equipment that it plans to sell to its Chinese subsidiary. In China, intellectual property protections are weak or non-existent. The British parent sells identical equipment to an unrelated Irish buyer in Dublin, Ireland, where IP protections are rigorously enforced. Except for the intellectual property protections, assume that the Chinese and Irish transactions are equivalent with respect to all other relevant factors. In this case, under Treas. Reg. 1.482-1(d), the transfer price charged to the Chinese subsidiary should most likely be a. the same as that charged to the Irish buyer b. somewhat lower than that charged to the Irish buyer c. much lower than that charged to the Irish buyer d. higher than that charged to the Irish buyer e. none of the above Under the law of the State of Georgia, a foreign currency forward contract would be considered a fully executory contract. True False (T/F) Under German law, it is impossible for UPS (or any other company) to enter into an APA with the German tax authorities. True False The Fill in the Blank 01 notion (enter the appropriate nationality) of group responsibility conflicts with the way standard costs and budgets are used in the United States to assign Fill in the Blank 02 (fill the blank) to specific individuals. Intel, STMicro, and Francisco partners are going into business together taking equity shares in the new venture of, respectively, 45.1%, 48.6% and 6.3%. Assuming no other control-related factors are present, under International accounting principles, a. only Intel should account for the new venture as a joint venture. b. Intel and STMicro should account for their interests in the new venture as a joint venture. c. Intel and STMicro should consolidate the new venture. d. only STMicro should consolidate the new venture as a joint venture. e. The information provided here is insufficient to determine who should (1) consolidate or (2) account for the new venture as a joint venture. Under the FASB ASC, the choice of functional currency is primarily the responsibility of a. company management who can change their choice from one year to another if the facts support such a change. b. company management who cannot change their choice once they make it. c. external auditors who cannot change their choice except in extraordinary circumstances. d. external auditors who can change their choice from one year to another. e. None of the above Generally speaking, in the process of consolidating foreign-currency subsidiaries, the proper order of completion should logically be a. language translation, GAAP harmonization, currency translation, consolidation b. language translation, currency translation, GAAP harmonization, consolidation c. consolidation, GAAP harmonization, currency translation d. GAAP harmonization, language translation, consolidation, currency translation Your American client is considering the purchase of a company headquartered in Greece. Recently, media sources have been full of stories detailing political unrest in Greece resulting from that country's financial crisis. In its capital budgeting analysis of this potential Greek purchase, how should your client respond to these stories? a. Increase the expected periodic cash flows from the investment to reflect the expected impact of the political strife b. Decrease the NPV discount rate c. Reduce the expected periodic cash flows from the investment to reflect the expected impact of the political strife d. Increase the NPV discount rate e. Either c. or d. (or both) would be appropriate. From the viewpoint of the parent company, one disadvantage of translating subsidiary budgets (at actual budget-date exchange rates) and actual results (at the actual ending exchange) rate is a. This approach yields a revenue-line exchange-rate variance of zero. b. Local managers bear full responsibility for exchange rate changes. c. Local managers are likely to reject the imposition of sanctions for failure to manage exchange rate changes. d. This approach yields a cost-line exchange-rate variance that is statistically misleading. e. Local managers may want to hedge exposures at the local level when natural hedges already exist elsewhere in the consolidated group