Business, 07.04.2020 03:19, yurionice42069

Cooper Grant is the president of Acme Brush of Brazil, the wholly owned Brazilian subsidiary of U. S.-based Acme Brush Inc. Cooper Grantâ€™s compensation package consists of a combination of salary and bonus. His annual bonus is calculated as a predetermined percentage of the pretax annual income earned by Acme Brush of Brazil. A condensed income statement for Acme Brush of Brazil for the most recent year is as follows (amounts in thousands of Brazilian reals [BRL]):

Sales BRL 10,000
Expenses 9,500
Pretax income 500

After translateing the Brazilian real income statement into US dollars, the condensed income statement for Acme Brush of Brazil appeas as follows: (amounts in thousands of US dollars)

Sales $3,000
Expenses 3,300
Pretax income (loss) (300)

1. Explain how Acme Brush of Brazil's pretx income (in BRL) became a US dollar pretax loss.
2. Discuss whether Cooper Grant should be paid a bonus or not.

Answers: 3

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Cooper Grant is the president of Acme Brush of Brazil, the wholly owned Brazilian subsidiary of U. S...