Question

PLEASE HELP ME : EMERGENCY

Maple Leaf Canada (MLC) is a Canadian sightseeing agency that offers holiday
packages to the Canadian tourists. Until recently, all of its businesses were in
Canada. It just established a subsidiary in Kota Kinabalu (KK), Sabah, which
provides tour services in the Sabah islands for Canadian tourists. It rented a shop
near the port of KK. It also hired residents of KK who could speak English and
provide tours of the Sabah islands. The subsidiary’s main costs are rent and
salaries for its employees and the leasing of a few large boats in KK that use for
the tours. The Canadian tourists pay for the entire tour in Canadian Dollar
(CAD) at MLC main office in Toronto before they depart for Sabah.
Required:

	Determine the MLC’s cash outflows and cash inflows and explain if these cash flows are favorably or unfavorably affected when the MYR appreciates against the CAD ?

Answer 1

The cost outflows of KK Subsidiary are :

1. Office rent

2. Salaries of employees

3. Lease Rental for boats.

As the expenses are done in MYR, the MYR appreciation against CAD will have no impact on the cash flow of the KK subsidiary.

The Cash Inflow for KK subsidiary is the Tpurist payments for Sabah island tours paid in Canadian Dollar
(CAD) at MLC main office in Toronto. As the revenue is paid in CAD , the cash inflow will be negatively impacted when MUR appreciates against CAD as one CAD will convert to lesser amounts of MYR than before the appreciation.