Discuss the below:
Section One
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 Chevrolet Impala,
3. foreigner purchases GE dryer,
4. U.S. resident purchases UK stock, and
5. U.S. resident borrows funds from British broker to purchase stock.
Section Two
Review the case study “H&M: The Challenges of Global Expansion and the Move to Adopt International Financial Reporting Standards.”
1. 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?
2. Payments or liabilities may also be subjected to exposure. Explain the operational hedging strategies that may offset exposure.