Thornton Corp. is based in the U.S. and has no foreign subsidiaries. It has extensive liabilities denominated in Indian rupees resulting from imports from India. However, Thornton's revenues are denominated solely in U.S. dollars. Which of the following is probably not true?

Question

Quizplus · Accepted Answer

Since Thornton does not have any foreign subsidiaries, it does not have any foreign currency denominated assets or liabilities to convert to U.S. dollars for financial reporting purposes. Therefore, it does not have any translation exposure. Choices A, B, and C are all true because Thornton has either transaction or economic exposure to fluctuations in the Indian rupee exchange rate due to its import activities.