Two Separate Discussion Questions

User Generated

Xnegre

Business Finance

Description

Discussion 1

What is the purpose of a “convenience translation”? How are they used in financial analysis? What are some features of financial statements that a company might translate in a convenience translation?

Discussion 2

Describe in detail one possible transfer pricing tactic that a company may use to minimize costs. Do you think this tactic has merit in today’s economic environment?

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Explanation & Answer

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Running Head: DISCUSSION 1

1

Discussion 1
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Institution Affiliation
06/01/2018

DISCUSSION 1
The business environment of today is very competitive, companies have embraced
globalization and have established branches in different parts of the world in the effort to
increase their market share promote the brand and improve their incomes. It is also a way of
taking advantage of the low costs of operation in overseas to improve their margins (Ang,
2016). This causes the company to transact in various forms of currencies but when it comes
to the financial reporting, the currency has to be one. This currency is what is referred to as
the functional currency.
Reporting in different currencies will create an inefficient way of judging the
performance of the business since each has their own exchange rate. Most companies use the
currency of the country where the head office of the company is located. It becomes easier to
make analyses of the performance of different branches by use of the functional currency.
The figures on their profit margins, costs, and other indicators...


Anonymous
Really great stuff, couldn't ask for more.

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