When the Parent Company of a Foreign Subsidiary Believes That

question 55

Multiple Choice

When the parent company of a foreign subsidiary believes that all of its investment in the subsidiary is exposed to foreign exchange risk, what method of translation should be used in consolidating the financial statements?

• A) Current rate method
• B) Current/noncurrent method
• C) Monetary/nonmonetary method
• D) Temporal method

---

Definitions:

Value Chain Analysis

A method for dissecting a business's activities to assess its competitive strengths and identify ways to create efficiency and value.

International Strategy

Actions by which companies manage differences across borders to create advantages over their competitors.

Entry Modes

Strategies or methodologies that businesses employ to enter new markets or start operations in different countries, including joint ventures, franchising, and direct exports.

Penetrate

To enter or make a way into a market, sector, or area, often facing barriers or competition.