ACCT 558 Advanced Accounting Valuation- Functional Currency Recommendation


Learning Objectives:
1.Familiarize the student with transfer pricing

2. Expose the student alternative forms of business

3. Improve student research skills relative to an accounting issue

4. Apply accounting research to a business scenario and make a recommendation

5. Improve student written communication skills
Assignment:  Your client ConAgra Brands (CAB) recently purchased Birdseye Frozen Vegetables from Kraft Foods. The acquisition included three vegetable processing plants Waseca, MN, Fulton, NY and Celaya, Guanajuato, Mexico. The plant in Mexico is the first time CAB purchased an international food processor. The plant in Mexico established as a separate legal entity and wholly owned subsidiary Birdseye de Mexico Sociedad Anonimo (BEMSA) under the Mexican maquiladora program. Annually, BEMSA imports seeds, fertilizer and vermiculite to grow plantlets. They contract local growers to plant the plantlets and grow fresh broccoli and cauliflower (vegetables) that is processed and frozen in their plant. Annually, BEMSA exports all 55 million pounds processed of frozen vegetables to the parent company in the United States at an agreed upon international transfer price charging CAB in pesos. Since this is CAB first experience with international food processing, and transfer of goods, they contracted your consulting firm to research the BEMSA business model and provide a report and recommendations about how they should proceed in advice of their first trip to Celaya.

Your ten page report excluding references should include the following subheadings:

1. Transfer Pricing
2. International Transfer Pricing
3. Maquiladora
4. Functional Currency (FAS 52)
5. Functional Currency Recommendation

For points 1-4, you simply need to research and provide a summary of the concepts for CAB management. For point 5, Functional Currency Recommendation, you need to apply the concepts from FAS 52 (point 4) to make and support a recommendation about functional currency BEMSA/CAB should use consolidating BEMSA’s financial statements into CAB financial statements. For simplicity purposes, please abbreviate CAB and BEMSA when referring to the companies in your paper. 

Do not add a header (e.g. Your name and class). The first words on your paper will be the sub-header for transfer pricing.    

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