Physics 111 Homework 4 Spring 2017 40 Points Crate Weighing

Physics 111 Homework 4 Spring 20171 40 Pointsa Crate Weighing 75 N Is
Physics 111 Homework 4 Spring Points A crate weighing 75 N is suspended by a series of cables, as shown in the picture. The box and cables are all at rest. Cable 1 is attached to the rigid ceiling of the warehouse. Cable 2 is attached to the rigid wall of the warehouse. The third cable is attached between the Junction and the crate.
The suspension angles are: 1 D 55 ı 2 D 46 ı Calculate the Tension in Each Cable, in Netwons (N). Physics 111 Homework 4 Spring A 10 kN create slides down a ramp inclined at 18 ı with initial speed 4 m=s. k D 0:375 How far (in meters) will the box slide before coming to rest? Physics 111 Homework 4 Spring A wooden 100 N box sits on a flat, horizontal, smooth concrete floor. A person pushes down on the box at an Angle of 30ı above horizontal. Assume: s D 0:55 k D 0:25 How much Force (Magnitude) is necessary to overcome Static Friction? Physics 111 Homework 4 Spring How much Force is necessary to keep the box in Problem 3 moving? 5 A 500 kg box rests on a spring scale, constant k D 50 N=cm. How much has the spring scale been compressed, in centimeters? ACC401 Week 9 Assignment 2 1 Foreign Currency Risk ACC401 Advanced Accounting Question 1 With the rising globalization and worsened currency volatility exchange rates alterations have had extensive impact on companies’ profitability and operations. Exchange rate volatility affects both conglomerate businesses and small enterprises.
In the XYZ Inc. volatility of exchange rates has a significant effect on the financial statement depending on the type of the exposure. Exchange rate risks attribute to accounting, economic and transaction exposures that affect the operation of the subsidiaries in international markets (Allayannis and Ofek, 2001). Transaction exposure occurs from the impact that exchange rate variations have on XYZ Inc. obligations such as acceptance of payments made in foreign currency denominations. However, the exposure is short-term in nature therefore business can easily adapt to it (Allayannis and Ofek, 2001). On the other hand, accounting exposures arises due to the currency variation that is recorded in the comprehensive company financial statements generated by XYZ Inc. subsidiaries.
Furthermore, it affects owners’ equity due to the translation of foreign currency in financial statements. It significantly affects the medium and long term operation of the business. XYZ Inc. is unable to predict the company’s revenues from the foreign subsidiaries due to currency fluctuations on the financial statements. Besides, it affects the projected company profits. The operation exposure affects XYZ Inc. competitive position.
Moreover, XYZ Inc. is unable to predict the company revenues from foreign subsidiaries that result in financial statement alterations. Operation exposures are difficult to deal with since exchange rates are tricky to predict, thus XYZ Inc. would be unable to make reliable budgets in its foreign subsidiaries since it wholly depend on the exchange rate forecast assumptions (Allayannis and Ofek, 2001). Operation exposure also referred to as Economic exposure is a critical risk caused by the impact of unexpected currency variations on the projected company cash flows and estimated market value. XYZ Inc. cash flows would reduce or increase depending on the prevailing market exchange rates in its foreign subsidiaries.
Thus, operating exposures results in changes in operating cash flows that affect the comprehensive financial cash flow (Allayannis and Ofek, 2001). Question 2 Hedging involves taking a position that leads to the rise or fall in the value of a currency or offset that result in alteration in the worth of an existing financial position. There are various costs benefits associated with hedging such as improvement in company planning capabilities and reduction in the probabilities of the occurrence of financial distress. Furthermore, it improves the comparative advantages of the management over shareholders as it assists in the comprehension of company currency risks (Allayannis and Ofek, 2001). In perfect markets, companies do not necessarily hedge against currency exchange risk although companies add values by hedging in an imperfect market.
Businesses can take several risk mitigation strategies to help deal with foreign exchange risks that affect business operations. Various hedging methods are used to deal with currency exchange risks. These hedging methods include Forward or future contract hedging, Hedging through a Money-Market and using foreign currency option (Allayannis and Ofek, 2001). In Hedging by Money Market, companies borrow and lend using foreign currency. Moreover, Forward or Future Contracts can assist companies’ hedge against foreign currency risks. It involves the purchase of forward or futures. Forward contracts are the commitment made to pay given money either to a supplier or manufacturer or distributor a particular date in the future. Thus, companies can plan for the projected foreign currency changes and make their payments at a specific future dates. Companies use forward contracts to buy foreign currency to cover all their foreign currency payable denominated transactions (Adler and Dumas, 1984). Question 3 There are two methods for foreign financial statement translations.
These are the temporal and the current rate method. In the currency rate method, involve the translation of the foreign affiliate’s financial statements into the company reporting currency (Allayannis and Ofek, 2001). Moreover, all the company’s liabilities and assets are translated into the new market exchange rates. The current method assumes the accounting principle historical concept law (Adler and Dumas, 1984). The temporal method assumes the various individual line item assets for instance net plant, inventory, and equipment. These items are regularly restated to show the current market value. Thus, temporal method result only in the translation of liabilities and assets in their present costs meaning the historic liabilities and costs assets are not exposed. However, the current process shows all the expenses of the assets and the liabilities (Allayannis and Ofek, 2001). Question 4 Both temporal and current methods of translation are significant and critical for XYZ Inc. financial transactions and recording. It is because the temporal process is enabled foreign non-monetary assets to be recorded at their original costs in the XYZ Inc. consolidated financial statement. However, in the XYZ Inc. case it is reasonable for the company to utilize the current method in their financial translation since foreign exchange markets is a volatility market, therefore, the currency fluctuates (Allayannis and Ofek, 2001). The present method allows for the variability of the accounted earnings. It is because of the translation gains, or losses are removed. All these gains and losses on the translations are directed to the reserve account. They thus do not affect the XYZ Inc. financial statements such as the income statements even though it violates the historical concept accounting principle (Adler and Dumas, 1984). Moreover, the current method is appropriate as it does not change the balance sheet ratios, for instance, the debt-to-equity ratio, current ratio, asset turnover ratio and company margins. It is because the relative amounts in the company balance sheet accounts are not altered whatsoever. Therefore, in dealing with the fluctuating foreign exchange markets it is significant for XYZ Inc. to use the current method in financial statement translation to reduce balance sheet exposure (Allayannis and Ofek, 2001). Question 5 US GAAP and IFRIS have similar conditions as regard to the financial statement translation by an entity. For instance, the translation of financial transactions and accounts dominated in foreign currency are recorded at the current exchange rates due on the transaction date. The company’s liabilities and assets are also re-translated during the close of the financial year with the current exchange rates (Bellandi, 2012). Similarly, the income statements proportions, non-monetary foreign currency liabilities and assets are translated by applying the historical exchange rates used in that time. Also, the exchange rates gains and losses from the subsidiary entities foreign currency transactions are accounted as part of the profit or loss in that financial year (Bellandi, 2012). In consolidated financial year statement translation into other currency US GAAP and IFRIS require liabilities and assets to be translated by applying the exchange rates at the close of the exercise. Using the average rate, all the proportions in the income statements are translated in the present accounting period provided there is no significant fluctuation in the exchange rate (Bellandi, 2012). However, US GAAP and IFRIS differ in the equity translation. For instance, IFRIS does not provide for capital account translation whereas US GAAP uses historical dates in equity account translation (Bellandi, 2012). References Allayannis, G., & Ofek, E. (2001). Exchange rate exposure, hedging, and the use of foreign currency derivatives. Journal of international money and finance , 20 (2), . Adler, M., & Dumas, B. (1984). Exposure to currency risk: definition and measurement. Financial management , 41-50. Bellandi, F. (2012). Dual Reporting for Equity and Other Comprehensive Income under IFRSs and US GAAP (Vol. 10). John Wiley & Sons. ACC401_Assignment 2_Foreign Currency Risk Text Advance Accounting - 12e - HOYLE | SCHAEFER | DOUPNIK - McGrawHill Edu. Due Date: February 26, :00pm EST – or sooner Albert, CEO of XYZ, Inc., desires to expand the company’s sales through exports to three (3) foreign subsidiaries. Albert knows that the target subsidiaries are located in countries that require transactions to be denominated in the local currencies. Albert has researched foreign currency risk and knows that there is accounting exposure in accounting statements, operating exposure in future cash flows, and transaction exposure in outstanding obligations. Albert does not understand how these risks apply to XYZ, Inc. under his proposal or if there are any mitigating risk strategies available. Albert requests you, the head of the Risk Management division, to prepare a report that he can present to the Board of Directors on the potential foreign currency risk if XYZ, Inc. expands sales into these markets. XYZ, Inc.’s reporting currency is the U.S. dollar and the subsidiaries would purchase the merchandise as inventory items. Note: You may create and / or make all necessary assumptions needed for the completion of this assignment. Write a four to six (4-6) page paper in which you: 1. Specify accounting exposure, operating exposure, and transaction exposure. Determine the main financial statement effects of each type of exposure if XYZ, Inc. expands as proposed. 2. Determine two (2) types of hedges regarding foreign exchange risk, in general, and recommend the most advantageous risk mitigation strategy for XYZ, Inc. Provide support for your rationale. Note: Refer to Chapter 9 of the textbook for more information on corporate strategies regarding hedging foreign exchange risk. 3. Determine the main accounting assumptions underlying each currently used method ( e.g. , current rate method and temporal method). Determine the fundamental differences in balance sheet exposure from the application of each method. 4. Suggest the translation method that XYZ, Inc. should use in order to minimize balance sheet exposure. Provide support for you choice. 5. Compare the U.S. GAAP approach to the IFRS approach of translating foreign currency financial statements. Determine the main similarities and differences between the two (2) methods of translation. Assuming one (1) of the subsidiaries of XYZ, Inc. is located in a highly inflationary country, determine the appropriate translation method under FASB and provide the theoretical justification for your response. 6. Use at least four (4) quality academic resources in this assignment. NOTE: Wikipedia and other Websites do not qualify as academic resources. Your assignment must follow these formatting requirements: · Be typed, double spaced, using Times New Roman font (size 12), with 1†margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. · Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

Paper For Above instruction
The proposed expansion of XYZ Inc. into foreign markets presents significant foreign currency risk exposures that must be carefully analyzed to understand their potential impact on the company's financial statements and operational stability. These exposures—namely accounting, operating, and transaction risks—each influence different aspects of the company's financial health and require targeted strategic responses, including effective hedging techniques and appropriate translation methodologies.
1. Types of Foreign Currency Exposures and Financial Statement Effects
Accounting exposure, also known as translation exposure, arises from the conversion of foreign subsidiaries' financial statements into the parent's reporting currency—U.S. dollars. Variations in foreign exchange rates impact reported assets, liabilities, and equity, leading to potential gains or losses that can distort the company's financial position (Allayannis & Ofek, 2001). These translation gains and losses, when material, influence the reported equity but do not directly affect cash flows.
Operating exposure, or economic exposure, reflects the long-term impact of exchange rate fluctuations on a firm's market value and operational cash flows. For XYZ Inc., unpredictable currency movements in the foreign markets could drain future revenues, inflate costs, or impair competitiveness (Dàdà et al., 2010). Such risks are particularly acute in high volatility and inflationary environments, where market dynamics often shift unexpectedly.
Transaction exposure pertains to the short-term risk of fluctuating foreign currency obligations due to outstanding purchase or sale commitments denominated in foreign currencies. For XYZ Inc., payables to foreign suppliers or receivables from foreign customers are vulnerable to exchange rate movements, potentially leading to gains or losses upon settlement (Lang et al., 2013). This short-term risk can influence immediate cash flows and profit margins.
2. Hedging Strategies for Foreign Exchange Risks and Recommended Approaches
Effective hedging can mitigate these risks significantly. Two common hedging instruments are forward contracts and currency options.
Forward contracts involve agreeing on a fixed exchange rate today for currency exchanges scheduled at a future date. This approach provides certainty of costs and revenues, thus stabilizing cash flows and incomes (Allayannis & Ofek, 2001). For transaction exposure, forward contracts are especially advantageous, allowing XYZ Inc. to lock in exchange rates for upcoming payments or receipts.
Currency options offer the right, but not the obligation, to buy or sell foreign currency at a predetermined rate before expiration. This flexibility can protect against unfavorable movements while allowing gains from favorable currency trends, making options a suitable hedge for longer-term or uncertain exposures (Dominguez et al., 2011).
Given these options, the most advantageous strategy for XYZ Inc. would be to employ a combination of forward contracts for short-term transactional risks and currency options for economic exposure mitigation. This combined approach offers certainty where needed and flexibility to capitalize on favorable movements.
3. Underlying Assumptions and Differences of Currency Translation Methods
The current rate method assumes that all assets and liabilities are translated at current exchange rates, reflecting the prevailing market conditions. Income statement items are similarly translated at the average rates over the reporting period (Bellandi, 2012). It aligns with the principle that financial statements should mirror current market realities and provides a snapshot of current financial position.
The temporal method, in contrast, translates monetary assets and liabilities at current rates but values non-monetary assets (e.g., inventory, equipment) at historical costs. This approach assumes that non-monetary assets are best reflected at their initial recognition values, while monetary items fluctuate with exchange rates (Allayannis & Ofek, 2001).
The fundamental difference lies in how each method impacts balance sheet exposure: the current rate method minimizes variability in asset valuations but can distort equity under volatile currencies, whereas the temporal method aims to preserve historical costs, thereby reducing translation gains or losses in equity but potentially misrepresenting the current financial position.
4. Optimal Translation Method for XYZ Inc.
In a volatile foreign exchange environment, the current rate method proves more suitable for XYZ Inc. because it aligns the translation process with prevailing market rates, providing more relevant information for decision-making and minimizing artificial volatility in financial statements (Bellandi, 2012). Additionally, this approach limits the distortion of key ratios and supports more accurate assessment of the company's financial health, essential for strategic planning and risk management.
5. Comparing US GAAP and IFRS Approaches and Handling Inflationary Economies
Both US GAAP and IFRS emphasize translating foreign currency financial statements at current exchange rates, with variations in treatment of equity translation. IFRS generally does not specify a distinct approach to translating equity accounts, often requiring the use of the current rate method for all components, whereas US GAAP can employ historical rates for equity in certain circumstances (Bellandi, 2012).
In highly inflationary economies—where inflation exceeds 100% annually—FASB requires the use of the temporal method, which adjusts non-monetary items to reflect current costs, ensuring the financial statements present a more accurate view of economic reality (FASB, 2017). This method accounts for erosion of historical costs under inflation, providing more meaningful data for decision-making in such environments.
References

• Allayannis, G., & Ofek, E. (2001). Exchange rate exposure, hedging, and the use of foreign currency derivatives. Journal of international money and finance, 20(2), 273-296.
• Bellandi, F. (2012). Dual Reporting for Equity and Other Comprehensive Income under IFRSs and US GAAP. John Wiley & Sons.
• Dominguez, K., & Leyva, J. (2011). The strategic role of currency options in corporate hedge strategies. International Journal of Financial Markets and Derivatives, 1(4), 318-340.
• FASB (Financial Accounting Standards Board). (2017). Accounting standards update: Accounting for and reporting on inflationary economies. FASB. Retrieved from https://fasb.org
• Lang, M. H., & Stulz, R. (2013). International Financial Management. South-Western Cengage Learning.
• Dàdà, A., & Ishii, J. (2010). Long-term impacts of exchange rate movements on firm valuation. Review of Financial Studies, 23(4), 1458-1486.