A Foreign Project in Hungary and Another in Japan Had

question 49

Multiple Choice

A foreign project in Hungary and another in Japan had the same perceived value from the U.S. parent's perspective. Then, the exchange rate expectations were revised, upward for the value of the Hungarian forint and downward for the Japanese yen. The break-even salvage value for the project in Japan would now be ____ from the parent's perspective.

• A) negative
• B) higher than that for the Hungarian project
• C) lower than that for the Hungarian project
• D) the same as that for the Hungarian project
• E) negative AND lower than that for the Hungarian project

---

Definitions:

Deferrals

Income or expenses that have been recorded but not yet earned or used, respectively, affecting future accounting periods.

Recognition

The process of recording an item or event in financial statements once it meets the criteria for financial reporting as defined by accounting standards.

Matching Principle

An accounting principle that requires companies to report expenses at the same time as the revenues they are related to are earned.

Matching Expenses

An accounting principle that matches expenses with the revenues they generate within the same accounting period.