INTERMEDIATE ACCOUNTING
5th Edition
ISBN: 9781307352320
Author: Doupnik
Publisher: MCG
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Chapter 1, Problem 5EP
To determine
Determine the larger multinational corporation from the two corporations by calculating an index of multi-nationality based upon the geographical distribution of sales revenue and non-current assets.
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Yuehua Telecom Inc. and Guangxin Technology Ltd. are two competing ICT corporations based in Shenzhen Special Economic Zone, China. Both companies’ stocks are traded at Shenzhen Stock Exchange. The comparative financial statements of Yuehua and Guangxin for the last four years (2016 – 2019) are shown in the Attachments 1 and 2:
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(B) Evaluate each company’s trends for sales, gross profit, and net income as disclosed on the comparative income statement.
Taft Corporation operates primarily in the United States. However, a few years ago it opened a plant in Spain to produce merchandise to sell there. This foreign operation has been so successful that during the past 24 months the company started a manufacturing plant in Italy and another in Greece. Financial information for each of these facilities follows:The company’s domestic (U.S.) operations reported the following information for the current year:Taft has adopted the following criteria for determining the materiality of an individual foreign country: (1) Sales to unaffiliated customers within a country are 10 percent or more of consolidated sales or (2) long-lived assets within a country are 10 percent or more of consolidated long-lived assets.Apply Taft’s materiality tests to identify the countries to report separately with respect to (a) revenues and (b) long-lived assets.
ABC Inc. is a U.S. firm with annual export sales to Canada of about C$500 million. Its main competitor is XYZ Inc., also based in the United States, with a subsidiary in Canada that generates about C$500 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Based on the information provided, which company is subject to a higher degree of translation exposure? Explain.
Chapter 1 Solutions
INTERMEDIATE ACCOUNTING
Ch. 1 - Prob. 1QCh. 1 - 2. What accounting issues arise for a company as a...Ch. 1 - 3. Why might a company be interested in investing...Ch. 1 - 4. How important is foreign direct investment to...Ch. 1 - 5. What financial reporting issues arise as a...Ch. 1 - 6. What taxation issues arise as a result of...Ch. 1 - Prob. 7QCh. 1 - 8. Why might a company want its stock listed on a...Ch. 1 - 9. Where might one find information that could be...Ch. 1 - Prob. 10Q
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