Chapter One
Exercise 3. a. The sales and expenses are recorded in U.S. dollars using the foreign currency rate of BRL to USD at the time of the transaction. This rate fluctuates continuously. As the rate changes, more or less revenue and expenses will be recorded in USD. For example, if the company had a single expense of 500 BRL (Brazilian reals) and the foreign currency translation rate on that day was .3 BRL to USD, the company would record expense of $150 USD. If the same transaction happened another day, the rate could change to .35 making the translated USD expense $175. The BRL value of the expense does not change, but there appears to be more expense in USD due to foreign currency exchange. b. Cooper Grant should be paid a bonus based on the pre-tax income in BRL. He has no control over the exchange rates. If the exchange rates were favorable and continuously increased over the month, I do not think Cooper Grant should get more of bonus in that instance because the USD pretax income could increase significantly.

Exercise 4: a. As of 12/31/13, there are 520 foreign issuers from 46 countries. b. The 5 countries with the largest number of foreign companies listed on the NYSE are as follows: i. Canada ii. China iii. United Kindgom iv. Brazil v. Bermuda c. Non-US companies have an increasing market share in the United States and benefit from listing shares on the NYSE.

Case 1-1
The first international accounting issue Besserbrau encounters is foreign exchange risk. Besserbrau, a German company, imports one ingredient from a company in the Czech Republic. The currency for Germany is the EURO (EUR) and the currency for the Czech Republic is the Czech Koruna (CZK). Besserbrau could have increased translation gain or loss depending on the fluctuation of the EURO to CZK