国际会计第七版英文版课后答案(第十章).doc

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1、Chapter 10Managerial Planning and ControlDiscussion Questions Solutions1. Four critical dimensions of long-range planning are: Identifying key drivers of a companys future progress. Develop forecasts of key developments and assess the companys ability to capitalize on these developments. Develop the

2、 information systems to support strategic choices. Translate strategic choices into actions. 2. A standard costing system has as its objective the notion of cost control. It estimates annually what costs should be under ideal operating conditions. Actual results are then compared with standard costs

3、 with variances reported to those responsible for incurring the variances. Kaizen costing has as its objective continuous cost reductions based on continuous manufacturing improvements. Cost reduction targets are set monthly with variances based on constant cost reductions; i.e., were costs this mon

4、th lower than last month? If not, why? 3. Financial managers must be prepared to evaluate foreign investments from multiple reporting perspectives. This significantly complicates the information requirements for decisions on foreign investment. Managements objective from a parent company perspective

5、 is to maximize shareholder wealth. To do this, management must select investment opportunities that promise the highest risk-adjusted net present values. Therefore, management accountants must identify cash flows that can be repatriated to the parent company, taking into consideration future exchan

6、ge rate changes. Because only after-tax cash flows are relevant, the timing and amounts of taxes payable on foreign source income must be estimated.A project evaluated from a host country s point of view necessitates an increase in the quantity of information supplied. The social costs and benefits

7、of investment proposals must supplement traditional cash flow information. Quantification of risk and the identification of acceptable rates of return to sovereign governments call for measurement techniques new to internal accounting tool kits. 4. Many variables must be considered when measuring a

8、multinational entitys cost of capital. These variables include: a. Differential interest rates between national marketsb. Foreign business riskc. Foreign exchange riskd. Political riske. Investor valuation models in different countriesf. International taxesg. International financial reporting and di

9、sclosure practicesh. Governmental restrictions on fund remittancesi. Joint venture arrangementsj. National financial normsk. Differential inflationl. Different financial institutions and instrumentsm. International diversification effectsn. National savings patterns5. A major complexity in designing

10、 multinational information and control systems is culture. Cultural differences in attitudes towards risk and authority, need achievement levels, and language often result in misunderstood directives, lower tolerance to criticism, unwillingness to seek assistance when in doubt, unwillingness to dele

11、gate authority, and reluctance to assume responsibility. As a result, performance standards and incentive structures must often be adjusted for foreign nationals. Global competition also means that a firms production, marketing, and financing strategy must be truly international in scope. The likely

12、 result is that foreign subsidiaries will be viewed as parts of an integrated network. To coordinate parent and subsidiary decisions, management will need information that enables it to plan, coordinate, and control global production, marketing, and financial strategies.6. The first variance holds e

13、xchange rates constant and examines how the local manager performed in terms of his or her primary operating responsibilities. In effect, the local manager is not held accountable for exchange rate changes. The second variance examines what portion of the local managers actual results were attributa

14、ble to exchange rate changes. This exchange rate variance will hopefully be offset by other exchange rate exposures encountered by sister affiliates which the international division manages. The final variance looks at the original budget and says, if the budgeted performance were actually achieved,

15、 how successful was Treasury in forecasting foreign exchange rates for that particular country. 7. An examination of the seven caveats near the end of the chapter will highlight some of the major issues involved in designing and implementing international performance evaluation systems. We illustrat

16、e two major issues raised by these caveats. First, foreign subsidiaries should not be evaluated as independent profit centers when they are really strategic components of a multinational system. Company-wide return-on-investment criteria should be replaced by performance measures more in line with t

17、he specific objectives and environments of each foreign subsidiary being evaluated. One example of a dysfunctional evaluation system is the practice of appraising international financial subsidiaries in terms of traditional rate-of-return criteria. These subsidiaries should be evaluated according to

18、 their intended mission, which is to increase the supply of funds to the multinational enterprise at the lowest possible cost. Rate-of-return statistics should be replaced by measures reflecting the quantity and cost of funds secured domestically. Another approach would be to evaluate the overseas f

19、inancing subsidiary in terms of the benefits that its operations make possible for the multinational system as a whole as opposed to the costs it incurs in securing the necessary funds.Second, to protect the value of assets located in devaluation-prone countries, headquarters management often will r

20、emove surplus funds from foreign operating subsidiaries by increasing the transfer prices the subsidiaries must pay for imported components. Evaluating foreign managers in terms of their reported profits is grossly unfair when artificial transfer prices are imposed. It is more appropriate to discoun

21、t the effects of strategic pricing actions on subsidiary management performance, that is, measure performance in terms of physical production statistics or value-added.8. Money loses purchasing power every day in a highly inflationary economy. To properly measure economic performance, transactions s

22、hould be recorded in hard currency equivalents on the day the transaction is settled. If a sale is made for cash, its value is its hard currency equivalent on that date. Recording the sale at any other date distorts the transaction by introducing changes in the purchasing power of money (or implicit

23、 interest) into the analysis; that is, the recorded amount will not reflect the transaction s true value.9. We favor the budgetary exchange rate combination that uses a projected rate to set the budget and the end-of-period rate to track performance. Use of a projected rate to set the budget encoura

24、ges managers to incorporate the effects of anticipated exchange rate changes into their operating plans and decisions. Use of the ending rate to monitor performance motivates managers to respond to unanticipated exchange rate changes. Where local managers have the authority and means to hedge curren

25、cy changes, it is justifiable to hold them accountable for unexpected rate changes. While they cannot control exchange rate changes, they can counter their adverse effects some before and some after the rate change. We think that making local managers accountable for unexpected exchange rate changes

26、 when they do not have the necessary hedging authority is unjustified.10. This discussion question is designed to get students to think outside the box, so their suggestions should not be constrained but supported by their analysis. A good tack would be to break the class into small discussion group

27、s and have each group select a spokesperson to report back on alternative strategies they identified. 11. For:a. There is a reduced cost of implementation.b. Financial control may not be a critical problem during the initial phase of operationsc. There are fewer problems related to preparing and ana

28、lyzing consolidated reports of domestic and foreign operations.d. The financial control system can be installed more quickly as system testing and design have already been completed.e. Headquarters personnel assigned abroad will feel comfortable with a familiar control system.f. The system facilitat

29、es centralized control from corporate headquarters.Against:a. The organization and environment of foreign operations may be sufficiently different to warrant tailor-made control systems.b. Foreign personnel may become frustrated and demoralized in having to adapt to an unfamiliar control system.c. R

30、econciliation of data generated by two different but parallel control systems may not be a serious problem given extant data processing technology.d. Local managers adapting to the transplanted control system may engage in decisions that are dysfunctional to the success of local operations.e. It is

31、the mission of the foreign unit and not the executives need to feel comfortable that should dictate the type of control system employed.f. Successful implementation of the transplanted control system may dictate the sole use of domestic company personnel, which may sour relations with the host gover

32、nment.12. Value reporting is forward looking whereas the traditional financial reporting model students learn is historical in its orientation. Those who favor value reporting will appreciate its focus on what financial statement analysis is trying to achieve. Moreover, it provides a way of eliminat

33、ing the arbitrary distinction that is drawn between managerial and financial accounting. Those opposed to value reporting will argue that the information is less objective and leaves too much to management discretion. Discussion Questions1. 2,250/100 units = 22.50 X 1.10 = 24.75.2. Slovenias target

34、cost is derived as follows:Selling price = 21.50 X 100 units = 2,150Allowable costs = 2,150 - .10X = XX = 1,955This calculation implies that Glasgow Corporation needs to reduce production costs by 295 2,250 - 1,955. 3. The following analysis ignores Russian withholding taxes on dividends remitted to

35、 the U.S. parent. Chapter 11 treats this aspect of international taxation.Cash FlowsRussian Subsidiary Year 1 Year 2 a. Pre-tax earnings RUB 55,600,000 RUB 130,332,000 b. Income tax at 40% 22,240,000 52,132,800 c. Net income RUB 33,360,000 RUB78,199,200 d. Dividend to U.S. parent(line c X 70%) RUB 2

36、3,352,000 RUB 54,739,440U.S. Parent e. Income RUB 23,352,000 RUB 54,739,440 f. Dividend gross-up(line d./line c. X line b) 15,568,000 36,492,960 g. Taxable income RUB 38,920,000 RUB 91,232,400 h. U.S. tax at 34% 13,232,800 31,019,016 i. Less: Foreign tax credit(line f) 15,568,000 36,492,960 j. U.S.

37、taxes payable(line h - line i) -0- -0- k. Net cash flow (rubles)(line e - line j) RUB 23,352,000 RUB 54,739,440 l. Net cash flow (dollars) $ 1,167,600 $ 2,606,6404. This exercise should make for interesting discussion and should be used to highlight the many measurement issues surrounding foreign in

38、vestment decisions.Year Cash Flow Exchange Cash Flow PV factor Present Value(Rubles) Rate (Dollars) at 20% equivalent0 -8,000,000 1.000 -8,000,0001 23,352,000 R20 = $1 1,167,600 .833 $ 972,6112 54,739,440 R21 = $1 2,606,640 .694 $1,809,0083 57,476,412 R23 = $1 2,498,974 .579 $1,446,9064 60,350,232 R

39、25 = $1 2,414,009 .482 $1,163,5525 63,367,743 R25 = $1 2,534,710 .402 $1,018,9536 66,536,130 R25 = $1 2,661,445 .335 $ 891,584 Net present value $ (697,386)Because the net present value is negative, the investment might not appear attractive. However, students will quickly and rightly begin to quest

40、ion the exercise s assumptions. Points that students should raise include: 1. The measurement of cash flow: Should one ignore cash flows beyond year 6?2. Do accounting principles differences affect the measurement of income and cash flow?3. What is the terminal value (including the recapture of work

41、ing capital at the end of the 6-year investment horizon)?4. Is it wise to penalize all future cash flows by a 10 percent premium? One could argue that the risk premium might be partly offset by an international diversification discount. How does one quantify risk in a multinational setting?5. How re

42、asonable are exchange rate forecasts?6. Tax rates are seldom constant.7. How valid are the strategic dimensions of the investment decision?5. This question should generate useful ideas and discussion on the importance of strategic thinking and analysis.6. YTL1,000,000 Expenses in Month 1Varying Invo

43、ice Dates and Payment Dates_Invoice Payment Conventional ProposedDay Day Measure Measure Difference_1 Cash 7,692 10,000 2,3085 15 days 7,692 8,361 6695 25 days 7,692 7,692 0.07. The answer will depend on the student s domicile. The purpose of this exercise is to force students to think about how env

44、ironmental considerations affect the measurement and interpretation of accounting-based performance measures. Political considerations such as legally required capital infusions from the parent company (e.g., Mexico) will increase the denominator of the ROI ratio and reduce that statistic relative t

45、o a company that can fill most of its financial needs by local borrowing (Singapore). Economic considerations such as inflation and currency devaluation (Mexico) will tend to lower the numerator of the ROI statistic relative to a strong currency country (Singapore) with lower rates of inflation. Soc

46、ial and cultural considerations would affect a firm s operating leverage (i.e., the ratio of fixed costs to variable costs in a firm s operating cost structure). This, in turn, would magnify changes in income or losses relative to a change in sales for that company. Finally, legal considerations (such as the impact of tax law on financial reporting) would tend to impart a conservative bias to reported earnings where generous depreciation allowances, such as accelerated and excess depreciation, are permitted. 8.Unit(attributable items)Sal