If a U.S.-based MNE translates its German subsidiary's financial statements from euros into dollars using the current-rate method, how would it recognize translation gains and losses?
A) Gains and losses would be taken to the income statement.
B) Gains and losses would be recognized on the balance sheet in owners' equity.
C) Gains and losses are not recognized since the financial statements are in dollars.
D) There are transaction gains and losses but not translation gains and losses.
Question 2
Under the current-rate method of translation, any gain or loss is known as a(n) ________.
A) liability
B) foreign-exchange
C) annual net income
D) accumulated translation adjustment
Question 3
Gavin Pharmaceuticals is a U.S.-based MNE. Which of the following is probably Gavin's most important metric when evaluating the firm's performance?
A) foreign sales
B) market share
C) return on investment
D) sales revenue budget
Question 4
As a Japanese MNE, Sony is more likely to use ________ to evaluate performance of its foreign operations.
A) quality targets
B) market share
C) ROI
D) sales
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How to convert verbal statements into algebraic equations (Part 4)