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Unformatted text preview: 10 Student: ___________________________________________________________________________ 1. Translation exposure refers to: A. accounting exposure B. the effect that an unanticipated change in exchange rates will have on the consolidated financial reports of an MNC C . the change in the value of a foreign subsidiaries assets and liabilities denominated in a foreign currency, as a result of exchange rate change fluctuations, when viewed from the perspective of the parent firm D. all of the above 2. The recognized methods for consolidating the financial reports of an MNC are: A. short/long term method, current/future method, flexible/inflexible method, and economic/noneconomic method B. current/noncurrent method, monetary/nonmonetary method, short/long term method, and current/future method C. current/noncurrent method, monetary/nonmonetary method, temporal method, and current rate method D. temporal method, current rate method, flexible/inflexible method, and economic/noneconomic method 3. How many methods of foreign currency translation have been used in recent years? (U.S. GAAP.) A. One B. Two C. Three D. Four 4. Translation exposure, also frequently called accounting exposure, refers to the effect that an unanticipated change in exchange rates will have on the A. Choice of accounting methodology. B. Consolidated financial reports of a MNC. C. Firms competitive position D. Cash flows realized from foreign operations. 5. When exchange rates change, the value of a foreign subsidiary's assets and liabilities denominated in a foreign currency change A. When they are viewed from the perspective of the subsidiary firm. B. When they are viewed from the perspective of the parent firm. C . But this is only of material concern if the parent firm is liquidating the subsidiary in a bankruptcy and is forced to realize the value of the assets and liabilities at the current exchange rate. D. None of the above 6. The sensitivity of "realized" domestic currency values of the firm's contractual cash flows denominated in foreign currency to unexpected changes in the exchange rate is: A. Transaction exposure B. Translation exposure C. Economic exposure D. None of the above 7. The management of translation exposure is best described as A. Selecting a mechanical means for handling the consolidation process for MNCs that logically deals with exchange rate changes. B . Selecting a mechanical means for handling the consolidation process for MNCs that makes this quarter's accounting numbers as attractive as possible. C . Selecting a mechanical means for handling the consolidation process for MNCs that treats inventory valuation as LIFO on the income statement and FIFO on the balance sheet....
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This note was uploaded on 07/28/2011 for the course FIN 308 taught by Professor Canarella during the Summer '11 term at University of Nevada, Las Vegas.
- Summer '11
- Exchange Rate