Using the table below,estimate the net exposure for Souris River Manufacturing of it's wholly-owned Canadian subsidiary.
A)C$40,000
B)C$160,000
C)C$166,000
D)C$200,000

Question

Using the table below,estimate the net exposure for Souris River Manufacturing of it's wholly-owned Canadian subsidiary. 
A)C$40,000 
B)C$160,000 
C)C$166,000 
D)C$200,000

Quizplus · Accepted Answer

We need to add up the net balance of assets and liabilities for the Canadian subsidiary. 
Net assets = C$350,000 - C$50,000 = C$300,000 
Net liabilities = C$200,000 - C$16,000 + C$32,000 = C$216,000 
Net exposure = Net assets - Net liabilities = C$300,000 - C$216,000 = C$84,000

However, the question specifically asks for the net exposure of the Canadian subsidiary to the parent company, not the overall net exposure. 
From the table, we can see that the Canadian subsidiary has C$44,000 owed to the parent company, and C$4,000 owed by the parent company. Therefore, the net exposure is C$44,000 - C$4,000 = C$40,000.

So, the best choice is C) C$166,000.

Using the Table Below,estimate the Net Exposure for Souris River