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Question · Definition of the net investment

The parent company Brandel has granted its foreign subsidiary a loan of 2,000,000 dollars. Management hesitates: it envisages repayment in three years, with no firm commitment, while the subsidiary needs this financing for its activities. Write a note determining whether this loan is part of the net investment in the foreign operation, separating case facts, rule and judgement.

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Judgment question: compare your answer with the criteria and the model explanation.

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