(b) Kenduri Co is considering whether or not to manage the foreign exchangeexposure by using multilateral netting from the UK, with the Sterling Pound (£) asthe base currency. Multilateral netting is undertaken in order to show the cash flowtransaction. The following cash flows between Kenduri with three subsidiaries;Lakama from United States, Jaia from Canada and Gochiso in Japan. Below arethe details of cash flow transactions:Owed byKenduriOwed toLakamaJaiaAmountUS$ 4.5 millionCAD 1.1 millionKenduriKenduriGochisoJPY 180 millionGochisoJaiaCAD 3.2 millionGochisoLakamaUS$ 1.4 millionGochisoKenduriGBP 25 millionJaiaLakamaUS$ 1.5 millionJaiaKenduriGBP 40 millionJaiaGochisoJPY 115 millionLakamaGochisoJPY 320 millionLakamaGBP 2.1 millionKenduriJaiaLakamaCAD 2.5 millionCalculate the impact of undertaking multilateral netting by Kenduri Co and itsthree subsidiary companies for the cash flows due in three months if theexchange rate is $1.5938/£, CAD1.5690/£ and JPY131.91/£

Subsidiary Company- A subsidiary company is one that is controlled or owned by another company. The…

(b) Kenduri Co is considering whether or not to manage the foreign exchange exposure by using multilateral netting from the UK, with the Sterling Pound (£) as the base currency. Multilateral netting is undertaken in order to show the cash flow transaction. The following cash flows between Kenduri with three subsidiaries; Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are the details of cash flow transactions: Qwed by Owed to Amount

(b) Kenduri Co is considering whether or not to manage the foreign exchange exposure by using multilateral netting from the UK, with the Sterling Pound (£) as the base currency. Multilateral netting is undertaken in order to show the cash flow transaction. The following cash flows between Kenduri with three subsidiaries; Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are the details of cash flow transactions: Qwed by Owed to Amount

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

International Bonds

A bond is fixed-income security where a lender comes into a contract with the borrower. The borrower agrees to make payment and interest at a specified date in the future or on maturity period. It is a type of financing that helps to fulfill and meet obligations. Many people invest in bonds because it is a simple form of security.

Question

(b) Kenduri Co is considering whether or not to manage the foreign exchange
exposure by using multilateral netting from the UK, with the Sterling Pound (£) as
the base currency. Multilateral netting is undertaken in order to show the cash flow
transaction. The following cash flows between Kenduri with three subsidiaries;
Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are
the details of cash flow transactions:
Owed by
Kenduri
Owed to
Lakama
Jaia
Amount
US$ 4.5 million
CAD 1.1 million
Kenduri
Kenduri
Gochiso
JPY 180 million
Gochiso
Jaia
CAD 3.2 million
Gochiso
Lakama
US$ 1.4 million
Gochiso
Kenduri
GBP 25 million
Jaia
Lakama
US$ 1.5 million
Jaia
Kenduri
GBP 40 million
Jaia
Gochiso
JPY 115 million
Lakama
Gochiso
JPY 320 million
Lakama
GBP 2.1 million
Kenduri
Jaia
Lakama
CAD 2.5 million
Calculate the impact of undertaking multilateral netting by Kenduri Co and its
three subsidiary companies for the cash flows due in three months if the
exchange rate is $1.5938/£, CAD1.5690/£ and JPY131.91/£

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