 In this topic, we are going to show you an expatriate compensation worksheet under the balance sheet approach. You know that in the previous topic, we have discussed about the balance sheet approach, which is paying the expatriate according to the home country pay and compensation packages. So in this topic, we are going to look at a compensation worksheet, which is created for, which is a hypothetical worksheet created for a hypothetical expatriate going from America, from Australia to a hypothetical country, which is new euphoria. So let's take a look at this. It is a hypothetical worksheet showing that this is an employee who is Bryant Smith, his position is marketing manager. He's going from Australia to a country which is hypothetical country, which is new euphoria. The reason for change is that this is a new assignment and effective date of change in this hypothetical worksheet is 1st February 2008. In this, there is some information which is needed to calculate this worksheet and that is number one, the COLA index, which you can see is in the last line of this worksheet. The COLA index for new euphoria is 150 and that is the cost of living allowance. The cost of living allowance is going to be calculated according to this index, which is 150 for this hypothetical company that is new euphoria. And then another important information, which is not given in this worksheet is the rate of exchange. The rate of exchange of Australian dollar to local currency is 1.5. So accordingly, the payment is going to be made. One Australian dollar is equal to 1.5 dollars of the new euphoria country. So accordingly, the compensation package is going to be decided. So you can see that there are four columns. First column is for item. Second column is the total amount in Australian dollars per annum. The third column is the amount which is going to be paid in Australian dollars per annum. And the fourth column is the amount which is going to be paid in the local currency of new euphoria per annum. So you can see that it is a compensation package which is divided into both the local currency as well as the parent country currency. Now you can see that the total base salary which is being paid to this person, Brian Smith, is 200,000 Australian dollars per annum. Cost of living allowance which is being paid to this person is 50,000. But according to the COLA index, which is 150, the cost of living allowance will be paid in the local currency and that is going to amount to 75,000 dollars. So this is something which is being paid in the local currency and not in the parent country currency. Base salary is being divided into two components. One is payment in the local country currency and the second one is payment in the parent country currency. So 200,000, they are equally divided. You can see that half of the money is going to be paid in Australian dollars which is 100,000 rupees. And in the local currency, 100,000 rupees because the conversion of the rate of exchange is 1.5. So 100,000 is going to be amounting to 150,000 dollars. So he will be getting 100,000 Australian dollars and 150,000 new euphoria dollars according to the exchange rate. Alright, so then 20% of the amount is the overseas service premium which calculates to 40,000 rupees and those 40,000 rupees will be paid in the Australian dollar. Then 20% is the hardship allowance which is again 40,000 dollars which is going to be paid in the Australian dollars. Then the organization, the company is going to provide housing to this expatriate in the new euphoria country. That is going to be balanced and deducted from the person's compensation package and 7% of the salary is going to be deducted for the housing facility that is being provided by the organization itself. And that amounts to 14,000 dollars which you can see that it is in the negative amount and this is going to be deducted from the payment of the Australian dollars. And then finally tax deduction, this is something that we are going to discuss in the later topics, how tax is calculated and how tax is compensated in various certain occasions. So the tax savings of that person which he is going to get by working in that post country, those are going to be then deducted from his salary which amounts to 97,000 dollars and that is something which is going to be deducted from the Australian dollar amount of payment and that is 97,000 dollars you can see is being deducted in the Australian dollar column. So the total amount of payment that is due to that person is 219,000 dollars out of which 69,000 dollars are going to be paid in Australian dollars and 225,000 new euphoria dollars are going to be paid to this person per annum. So this is a simple and basic expect create compensation worksheet in which the person can easily see that how much salary and benefits he is going to get and what is the total amount of compensation that is going to be paid to this person.