Question

Based upon recording Balance of Payment (BOP) transactions. Determine whether or not the following is a debit, credit or no entry to the U.S. Balance of Payment statement. Also determine what chart of account is affected (i.e. CA, KA or OSB).

1. U.S. resident purchases Mercedes Benz C230.

2. U. S. resident purchases Chevelot Impala.

3. Foreigner purchases GE dryer.

4. U.S. resident purchases UK stock.

5. U.S. resident borrows funds from British broker to purchase stock.

6. If an investor wants to compare the financial results of The Gap, Inditex, and H&M, what difference does it make that their financial statements are prepared according to different GAAP? Would you expect there to be a big difference between U.S. GAAP as used by The Gap and IFRS as used by H&M and Inditex?

7. What types of IFRS did H&M decide to disclose in its financial statements in 2005? In 2015?

8. What type of exposure could the CFO of H&M in the U.S. be subjected to since H&M is based in Sweden and the financial statements are prepared according to IFRS?

9.Payments or liabilities may also be subjected to exposure. Explain the operational hedging strategies that may offset exposure

Answer 1

As per the stated guidelines for an expert, I am supposed to answer only first 4 parts (Max 4) in a single question.

Answer is attached below

Answer 1

U.S. resident purchases Mercedes Benz C 230 is debited in the Balance of Payment. BOP debit for increase in the asset and BOP credit for payment of liability. It affects OSB A/c

Answer 2

U.S. resident purchase Chevrolet Impala is debited in the Balance of Payment. It affects the OSB A/c

Answer 3

Foreigner purchases GE dryer is debited to Balance of Payment. It affects the OSB A/c

Answer 4

U.S. resident purchases UK stock is debited to Balance of Payment. Here, CA is affected.