Required information Exercise 15.9 (Static) Home Depot's International Expansion (LO15-1, LO15-2) [The following information applies to the questions displayed below.] In the Home Depot 2018 annual report, the following statement is included in explaining the primary risks facing the company. (This statement is an excerpt from a section of the annual report that is not included in Appendix A at the end of this textbook). If we cannot successfully manage the unique challenges presented by international markets, we may not be successful in our international operations and our sales and profitability may be negatively impacted. Our ability to successfully conduct retail operations in, and source products and materials from, international markets is affected by many of the same risks we face in our U.S. operations, as well as unique costs and difficulties of managing international operations. Our international operations, including any expansion in international markets, may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations and other foreign legal and regulatory constraints, as well as political and economic conditions. Risks inherent in international operations also include, among others, potential adverse tax consequences; potential tariffs and other import-related taxes and controls; greater difficulty in enforcing intellectual property rights; risks associated with the Foreign Corrupt Practices Act and local anti-bribery law compliance; and challenges in our ability to identify and gain access to local suppliers. . As a significant portion of our retail products are sourced, directly or indirectly, outside of the U.S., major changes in tax or trade policies, tariffs or trade relations could adversely impact the cost of, demand for, and profitability of retail product sales in our U.S. locations. Other countries may also change their business and trade policies in anticipation of or in response to increased import tariffs and other changes in U.S. trade policy and regulations. In addition, our operations in international markets create risk due to foreign currency exchange rates and fluctuations in those rates, which may adversely impact our sales and profitability. Exercise 15.9 (Static) Part a a. Identify the primary risks facing the company with regard to its international operations. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ? Local laws and customs in international locations. ? Unregulated international capital markets. ? Political and economic conditions in international locations. ? Risk of counterparty failing during settlement. ? U.S. laws applicable to foreign operations. ? Potential adverse tax consequences. ? Difficulty in managing suppliers and supply chains overseas. Exercise 15.9 (Static) Home Depot's International Expansion (LO15-1, LO15-2) [The following information applies to the questions displayed below.] In the Home Depot 2018 annual report, the following statement is included in explaining the primary risks facing the company. (This statement is an excerpt from a section of the annual report that is not included in Appendix A at the end of this textbook). If we cannot successfully manage the unique challenges presented by international markets, we may not be successful in our international operations and our sales and profitability may be negatively impacted. Our ability to successfully conduct retail operations in, and source products and materials from, international markets is affected by many of the same risks we face in our U.S. operations, as well as unique costs and difficulties of managing international operations. Our international operations, including any expansion in international markets, may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations and other foreign legal and regulatory constraints, as well as political and economic conditions. Risks inherent in international operations also include, among others, potential adverse tax consequences; potential tariffs and other import-related taxes and controls; greater difficulty in enforcing intellectual property rights; risks associated with the Foreign Corrupt Practices Act and local anti-bribery law compliance; and challenges in our ability to identify and gain access to local suppliers. . As a significant portion of our retail products are sourced, directly or indirectly, outside of the U.S., major changes in tax or trade policies, tariffs or trade relations could adversely impact the cost of, demand for, and profitability of retail product sales in our U.S. locations. Other countries may also change their business and trade policies in anticipation of or in response to increased import tariffs and other changes in U.S. trade policy and regulations. In addition, our operations in international markets create risk due to foreign currency exchange rates and fluctuations in those rates, which may adversely impact our sales and profitability. Exercise 15.9 (Static) Part b b. (i) Which rate is used to translate assets and liabilities denominated in a foreign currency into U.S. dollars? Average exchange rate for the period Actual exchange rate on the date of transaction Current exchange rate on the last day of the reporting period (ii) Which rate is used to translate a particular period's revenues and expenses denominated in foreign currency into U.S. dollars? Average exchange rate for the period Actual exchange rate on the date of transaction Current exchange rate on the last day of the reporting period (iii) Which rate is used to translate equity transactions denominated in a foreign currency into U.S. dollars? Average exchange rate for the period Actual exchange rate on the date of transaction Current exchange rate on the last day of the reporting period