Question 19 (1 point)

Consider the recently established the Hong Kong Subsidiary of an American firm. Above are two "T"accounts that represent the subsidiary's balance sheet at the end of the first year of operation. Use the "T" accounts to translate the Assets, the Liabilities and Equity from HK$ to US$ for purpose of the consolidated balance sheet.

The amount that should replace the letter 'A' in the figure above should be (be sure to specify HK$ or US$). . .

Question 19 options:

Question 20 (1 point)

Use the "T" accounts above to show the affect on both the subsidiary's and the Multinational Corporation's balance sheet if the value of the HK$ falls to US$/HK$ 0.10.

The number that should replace the letter 'A' is (be sure to specify HK$ or US$). . .

Question 20 options:

Question 21 (1 point)

Referring to the previous question, the amount that should replace the letter 'E' should be (be sure to specify HK$ or US$). . .

Question 21 options:

Question 22 (1 point)

Referring to the previous question, the amount that should replace the letter 'H' should be (be sure to specify HK$ or US$). . .

Question 22 options:

Question 23 (1 point)

Referring to the previous question, the amount that should replace the letter 'G' which is a new entry should be (be sure to specify HK$ or US$).

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Question 24 (1 point)

Referring to the previous question, if the management wanted to reduce the amount of this exposure, what would be the best way to do that?

Question 24 options:

	Pay down US$ debt and replace it with HK$ debt
	Reduce US$ equity and replace it with HK$ equity
	Reduce HK$ debt and replace it with HK$ equity
	Increase HK$ debt and reduce US$ debt
	Increase HK$ debt and reduce US$ equity

USS/HKS 0.125 Subsidiary (HKS) Subsidiary (USS) Liabilities 50,000,000 Assets Liabilities Assets 80,000,000 CTA Equity 30,000,000 Original Equity USS/HKSGBP 0.10 S$ Assets Liabilities Assets Liabilities CTA Total Equity Oiginal Equity USS/HKS 0.125 Subsidiary (HKS) Subsidiary (USS) Liabilities 50,000,000 Assets Liabilities Assets 80,000,000 CTA Equity 30,000,000 Original Equity USS/HKSGBP 0.10 S$ Assets Liabilities Assets Liabilities CTA Total Equity Oiginal Equity