Find the net exposure of the U.S.MNC with the following intra affiliate transactions shown:

Question

Quizplus · Accepted Answer

The given transactions are intra-affiliate transactions, which means they occur between two entities of the same MNC. Therefore, they cancel each other out in the consolidated financial statements of the MNC. The first transaction has a value of -$35 (note the negative sign), and the second transaction has a value of +$30. Adding them up, we get net exposure as -$5. However, we need to convert the result to the USD; the currency of the U.S. parent company. Assuming the transactions were denominated in a foreign currency, we would need to use the exchange rate to convert them to USD. Since there is no exchange rate given in the question, we assume that the transactions were denominated in USD. Thus, the net exposure of the U.S. MNC is -$5, which means it has a net obligation of $5 to its affiliate. Therefore, the best choice is (B)$65.

Find the Net Exposure of the U