The Latimore Company invested $8.5 million in a new plant in Italy when the exchange rate was 1.1500 euros to the dollar. At the
end of the year, the rate was 1.2000 euros to the dollar. (Indirect quotes.) a. Did Latimore make or lose money on the exchange rate movement? If so, how much?
b. What kind of exchange rate gain or loss was it?
c. What was the tax impact if Latimore’s marginal tax rate is 40%?
Latinmore made money on the exchange rate movement. It was an exchange rate gain of $369,566. The marginal tax impact was $147,826.
Explanation:
Since the standard practice in accounting is to reflect the current situation of the company, any change in the exchange rate that affects the assets of the company abroad must be recognized. The financial income of exchange gains are registered in the Income Statement and affects the base to pay income tax.
Answer – B (He could fill out a FAFSA form to determine what
financial aid he would qualify for)
<span>The Free Application for Federal Student
Aid (FAFSA) form can be filled out annually by both current and soon-to-be
college students in the United States to determine whether they are qualified
for student financial aid.</span>
The correct answer is "bona fide occupational qualification." This term signifies a characteristic of a potential employee that an employer is permitted to consider when hiring (like age, in this example). In other contexts, this would be seen as discrimination, and would thus be illegal. There must be a reason behind bona fide occupational qualification, as described in this example.
