What Is the Temporal Method? The temporal method (also known as the historical method) converts the currency of a foreign subsidiary into the currency of the parent company. This technique of foreign currency translation is used when the local currency of the subsidiary is not the same as the currency of the parent company. Differing exchange…
What Is Key Money? Key money is a fee paid to a manager, a landlord, or even a current tenant to secure a lease on a residential rental property. The term is sometimes used to refer to a security deposit. However, in some competitive rental markets, key money is simply a gratuity or a bribe….
What Is a Passive Foreign Investment Company (PFIC)? A passive foreign investment company (PFIC) is a corporation, located abroad, which exhibits either one of two conditions, based on either income or assets: At least 75% of the corporation’s gross income is “passive”—that is, derived from investments or other sources not related to regular business operations….
What Is a Brokered Deposit? A brokered deposit is a deposit made to a bank by a third-party deposit broker. A brokered deposit is a type of investment that attracts individual investors because the deposits typically offer higher interest rates. The brokered deposits are usually large-denomination and are often sold by a bank to a…
Investors across the globe are increasingly worried about the state of China’s economy–the world’s second-largest economy after the United States–which has been severely impacted by rising credit levels, a slowdown in its gross domestic product (GDP), and the ongoing trade war with the U.S. Very few economies have grown at the rate of China’s; according…
A leveraged buyout (LBO) is a type of acquisition in the business world whereby the vast majority of the cost of buying a company is financed by borrowed funds. LBOs are often executed by private equity firms who attempt to raise as much funding as possible using various types of debt to get the transaction completed….
In the development of the internet, one can point to landmark events that can be used to divide the process into stages. Among these important landmarks are the creation of the first wide-area computer networks in the 1960s, the development of an electronic mail system in the 1970s, the creation of ethernet later in that decade, the…
What Is Electronic Check Presentment (ECP)? Electronic check presentment (ECP) is a process that allows financial institutions to exchange digital images of checks instead of paper to increase the speed of the check-cashing process. The signing of the Check Clearing for the 21st Century Act (Check 21) by President Bush on October 28, 2003, permitted…
What Is Delivered-at-Place (DAP)? Delivered-at-place (DAP) is an international trade term used to describe a deal in which a seller agrees to pay all costs and suffer any potential losses of moving goods sold to a specific location. In DAP agreements, the buyer is responsible for paying import duties and any applicable taxes, including clearance and local taxes, once…