3.InExample10.2,aforwardcontractwasusedtoestablishaderivatives“hedge”toprotectCentralia
MINICASE:SUNDANCESPORTINGGOODS,INC.
SundanceSportingGoods,Inc.,isaU.S.manufacturerofhigh-qualitysportinggoods--principallygolf,tennisandotherracquetequipment,andalsolawnsports,suchascroquetandbadminton--withadministrativeofficesandmanufacturingfacilitiesinChicago,
Illinois.Sundancehastwowhollyownedmanufacturingaffiliates,oneinMexicoandtheotherinCanada.TheMexicanaffiliateislocatedinMexico
CityandservicesallofLatin
America.TheCanadianaffiliateisinTorontoandservesonlyCanada.Eachaffiliatekeepsitsbooksinitslocalcurrency,whichisalsothefunctionalcurrencyfortheaffiliate.Thecurrentexchangeratesare:$1.00=CD1.25=Ps3.30=A1.00=
￥105=W800.ThenonconsolidatedbalancesheetsforSundanceanditstwoaffiliatesappearintheaccompanyingtable.
NonconsolidatedBalanceSheetforSundanceSportingGoods,Inc.andItsMexicanandCanadianAffiliates,December 31, 2005(in000CurrencyUnits) Sundance,Inc. Mexican Canadian (parent) Affiliate Affiliate Assets Cash $1,500 Ps1,420 CD1,200 aefAccountsreceivable 2,500 2,800 1,500 Inventory 5,000 6,200 2,500 InvestmentinMexicanaffili2,400b - - ate InvestmentinCanadianaffil3,600c - - iate Netfixedassets 12,000 11,200 5,600 Totalassets $27,000 Ps21,620 CD10,800 LiabilitiesandNetWorth aAccountspayable $3,000 Ps2,500 CD1,700 dNotespayable 4,000 4,200 2,300 Long-termdebt 9,000 7,000 2,300 bCommonstock 5,000 4,500 2,900c Retainedearnings 6,000 3,420b 1,600c Totalliabilitiesandnetwor$27,000 Ps21,620 CD10,800 th accountsreceivable(payable)isdenominatedindollars(pesos). b
TheMexicanaffiliateiswhollyownedbytheparentfirm.Itiscarriedontheparentfirm’sbooksat$2,400,000.Thisrepresentsthesumofthecommonstock(Ps4,500,000)andretainedearnings(Ps3,420,000)ontheMexicanaffiliate’sbooks,translatedatPs3.30/$1.00. c
TheCanadianaffiliateiswhollyownedbytheparentfirm.Itiscarriedontheparentfirm’sbooksat$3,600,000.Thisrepresentsthesumofthecommonstock(CD2,900,000)andtheretainedearnings(CD1,600,000)ontheCanadianaffiliate’sbooks,translatedatCD1.25/$1.00. d e f
a.UsingthecurrentexchangeratesandthenonconsolidatedbalancesheetsforSundanceanditsaffiliates,prepareaconsolidatedbalancesheetfortheMNCaccordingtoFASB52.
ii.Usingthetranslationexposurereportyouhaveprepared,determineifanyreportingcurrencyimbalancewillresultfromachangeinexchangeratestowhichthefirmhascurrencyexposure.Yourforecastisthatexchangerateswillchangefrom$1.00=CD1.25=Ps3.30=A1.00=￥105=W800to$1.00=CD1.30=Ps3.30=A1.03=￥105=W800.
SuggestedSolutiontoSundanceSportingGoods,Inc.
ConsolidatedBalanceSheetforSundanceSportingGoods,Inc.itsMexicanandCanadianAffiliates, December 31, 2005:Pre-ExchangeRateChange(in000Dollars)
Sundance,Inc. Mexican Canadian Consolidated
(parent) Affiliate Affiliate BalanceSheet Assets Cash $1,500 $430 $960 $2,890 aefAccountsreceivable 2,100 849 1,200 4,149 Inventory 5,000 1,879 2,000 8,879 InvestmentinMexicanaff-b - - - iliate cInvestmentinCanadianaf- - - - filiate Netfixedassets 12,000 3,394 4,480 19,874 Totalassets $35,792 LiabilitiesandNetWorth Accountspayable $3,000 $358a $1,360 $4,718 dNotespayable 4,000 1,273 1,840 7,113 Long-termdebt 9,000 2,121 1,840 12,961 Commonstock 5,000 -b -c 5,000 bcRetainedearnings 6,000 - - 6,000 Totalliabilitiesandnet $35,792 worth a$2,500,000-$400,000(=Ps1,320,000/(Ps3.30/$1.00))intracompanyloan=$2,100,000. b,c
Theinvestmentintheaffiliatescancelswiththenetworthoftheaffiliatesintheconsolidation. d
TheparentowesaJapanesebank￥126,000,000.Thisiscarriedonthebooksas$1,200,000(=￥126,000,000/(￥105/$1.00)). e
TheMexicanaffiliatehassoldonaccountA120,000ofmerchandisetoanArgentineimporthouse.ThisiscarriedontheMexicanaffiliate’sbooksasPs396,000(=A120,000xPs3.30/A1.00). f
TheCanadianaffiliatehassoldonaccountW192,000,000ofmerchandisetoaKoreanimporter.ThisiscarriedontheCanadianaffiliate’sbooksasCD300,000(=W192,000,000/(W800/CD1.25)). TranslationExposureReportforSundanceSportingGoods,Inc.anditsMexicanandCanadianAffiliates,December 31, 2005(in000CurrencyUnits)
Japanese Yen Mexican Peso Canadian Dollar Argentine Austral Korean Won Assets Cash Accountsreceivable Inventory Fixedassets Exposedassets Liabilities Accountspayable Notespayable Long-termdebt Exposedliabilities ￥0 0 0 0 ￥0 Ps1,420 2,404 6,200 11,200 Ps21,224 CD1,200 1,200 2,500 5,600 CD10,500 A0 120 0 0 A120 W0 192,000 0 0 W192,000 ￥0 126,000 ￥0 ￥126,000 Ps1,180 4,200 7,000 Ps12,380 CD1,700 2,300 2,300 CD6,300 A0 0 0 A0 W0 0 0 W0
国际财务管理课后习题答案chater
