Question

How would you categorize the following transactions in the balance of payments for the United States. For each scenario, besure to discuss which section it enters as a credit and debit (for any entry in the current account, be sure to discuss if it is an import or export as well as whether it is a good or service)a.A French chef is hired to cater a US diplomats event in Franceb.An American purchases 1 Million dollars’ worthof shares in a Nigerian companyc.The United States forgives a 5 Billion dollar debt owed by a foreign countryd.An Italian movie pays for the rights to sing the English version of the "Happy Birthday" song to its American copyright holderse.16 million dollars’ worthof escargot is purchased by an American restaurant from Francef.An American business man in Los Angeles purchases crabs from a dealer in Seattle

Answer 1

Answer:

a. The transaction enters Current account as a Debit entry and is an import and a service.

b. The Transaction enters on the financial account as a debit.

c. The Transaction enters on the financial account as a credit.

d. The transaction enters on the current account as a credit and is more of an export and is also a service.

e.The transaction enters as a current account on a debit and is an import of a good.

f..The transaction enters as a current account on a debit and is an import of a good.

Explanation:

Transaction number c, the state forgives a debt meaning it needs to cancel it, the time it was granted it went on on a debit entry now they act like they received it so it should cancel that debit by credit.

transaction d, the song is a service because it is intangible, more or less inseparable from person doing it hence copyright and paying.