Homeko, Inc

question 21

Multiple Choice

Homeko, Inc. is located in the U.S., but it has subsidiaries in Germany. When the euro appreciates relative to the U.S. dollar, what is the direction of the translation adjustment to consolidate Homeko's financial statements?

• A) When there is net asset exposure, the translation adjustment will be positive.
• B) When there is net liability exposure, the translation adjustment will be positive.
• C) The direction of the adjustment is indeterminate.
• D) There will be no adjustment necessary unless the difference is realized.

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Definitions:

Q

Generally denotes quantity in economic and mathematical models, referring to the amount of goods or services.

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A particular philosophy or a specific way of thinking that is characteristic of a certain group or period.

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A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Velocity of Money

The rate at which money circulates in the economy, typically measured as the ratio of GDP to the national money supply.