1. Tax Jurisdiction and Double Taxation Basis for taxation come from three common bases for taxation…they are source, citizenship, and residence. (Fill in the blanks below) a. The citizenship basis taxes income of the country’s _________ regardless of source or where they reside. b. The residence basis taxes income of the country’s __________ regardless of source or citizenship. c. Almost all countries tax income earned within their borders–that is, at its _____________. 2. List the five major areas addressing the importance of international accounting. 3. Foreign currency transactions can be executed on a spot or forward basis.Fill in the blanks with the proper rate basis: ____________ the price today at which foreign currency can be purchased or sold sometime in the future.____________ the price at which foreign currency can be purchased or sold today. When executing trades on a spot or forward basis, premiums and discounts are involved. Circle or highlight the appropriate term: The forward rate can exceed the spot rate on a given date, in which case the foreign currency is said to be selling at a premium or discount in the forward market, or the forward rate can be less than the spot rate, in which case it is selling at a premium or discount. 4. List the factors that have had a significant influence on accounting development. 5. IAS #____ provides for selection of accounting policies, accounting for changes, dealing with changes in accounting estimates and correction of errors. 6. IFRS # ____ outlines the accounting when an acquirer obtains control of a business. 7. Define the term hedging. 8. What are the two International Accounting Standards that provide guidance for hedging? 9. A parent company needs to determine the appropriate method for translating the financial statements of a foreign subsidiary. To determine the appropriate translation method under both SFAS 52 and IAS 21, the functional currency of a foreign subsidiary must be identified. The functional currency is the primary currency of the foreign entity’s operating environment. It can be either the parent’s reporting currency or a foreign currency (generally the local currency). The functional currency orientation results in the following rule. Please fill in the blanks re translation method and the translation adjustments. Functional Currency Translation Method Translation AdjustmentParent’s currency _________________ ____________________Foreign currency _________________ ____________________ 10. Define functional currency. 11. The following are Capital Budgeting Techniques: 1. Payback period2. Return on Investment (ROI)3. Discounted Cash Flow4. Net Present Value (NPV)5. Internal Rate of Return (IRR) Match the above with the definitions below: ____________Discount rate that makes the initial investment equal the present value of subsequent net cash inflows ____________ Number of years to recover the initial investment ____________ Difference between the initial investment and the present value of subsequent net cash inflows discounted at a given interest rate. ___________ Rate of average annual net income to the initial investment or average investment (book value) 12. The following inventory information above was taken from the records of GlobeKom Ltd.: a. Under IAS 2, what should the Balance Sheet report for Inventory? b. Under U.S. GAAP, what should the Balance Sheet report for Inventory? 13. Under the FASB new lease accounting standard, what is the effect on the lessee? Lessor? And how will accounting methods change for the lessee? Lessor? 14. Strategic issues GOOGLE COMPANY…from the list below research GOOGLE COMPANY and write one or two paragraphs explaining how the GOOGLE COMPANY handles all of the issues.• Performance Evaluation Measureso Financial Evaluation – how does GOOGLE COMPANY regard its foreign operation▪ Investment center▪ Profit center▪ Cost centero Non-Financial Evaluation – how are the unit and the managers evaluated▪ Foreign operating unit evaluation▪ Managers of the unit evaluation• Management Control Systems and National Cultureso What steps, if any, is GOOGLE COMPANY taking to be sensitive to the national culture 15. Tell me why I should invest in GOOGLE COMPANY; you must provide at least one calculation (show calculation details) for a capital investment evaluation; i.e. ROI, NPV, IRR or the payback period. 16. Transfer pricing is more than just taxation. There are many other implications. List at least three. 17. In your own words, what is your understanding of the Sarbanes-Oxley Act of 2002 and what impact does the law have on GOOGLE COMPANY?