When Would the Balance Sheet Exposure Arising from the Current

question 43

Multiple Choice

When would the balance sheet exposure arising from the current rate method become realized?

• A) It is realized once the financial statements of the foreign operation and the parent are consolidated.
• B) It is realized any time the historical exchange rate is different from the spot rate at the balance sheet date.
• C) It is realized when the foreign operation is sold at book value and the proceeds are converted into parent company currency.
• D) It can never be realized because it is only the result of the choice of accounting methods and does not reflect real exposure.

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