Assume that a U.S.-based parent company, American Computer Corporation
(ACC), both buys parts from and sells parts to its wholly owned Mexican subsidiary,
Tijuana Computer Company (TCC). Assume further that ACC has
accounts payable of $10,000,000 that it is scheduled to pay TCC in 30 days and,
in turn, has accounts receivable of (Mexican peso) MP 115.00 million due from
TCC within 30 days. Because today’s exchange rate is MP 11.50/US$, the accounts
receivable are also worth $10,000,000.