Acanadian subsidiary of a u. s. parent firm is instructed to bill an export to the parent in u. s. dollars. the canadian subsidiary records the accounts receivable in canadian dollars and notes a profit on the sale of goods. later, when the u. s. parent pays the subsidiary the contracted u. s. dollar amount, the canadian dollar has appreciated 10% against the u. s. dollar. in this example, the canadian subsidiary will record a 61)
a) any gain or loss will be recorded only by the parent firm.
b) since the canadian firm is a u. s. subsidiary neither a gain nor loss will be recorded.
c) 10% foreign exchange loss on the u. s. dollar accounts receivable.
d) 10% foreign exchange gain on the u. s. dollar accounts receivable.
gains and losses are "realized" whereas
gains and losses are only "paper."
a) transaction; translation
b) translation; operating

Wo firms, a and b, each currently dump 50 tons of chemicals into the local river. the government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. it costs firm a $100 for each ton of pollution that it eliminates before it reaches the river, and it costs firm b $50 for each ton of pollution that it eliminates before it reaches the river. the government gives each firm 20 pollution permits. government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. what is the total cost of reducing pollution if firms are not allowed to buy and sell pollution permits from each other? what is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other? a. $3,000; $1,500 b. $4,500; $3,500 c. $4,500; $4,000 d. $4,500; $2,500