If a company has overseas assets and at a future date must represent these assets on its balance sheet,it faces ______ when doing so.
A) transaction exposure
B) economic exposure
C) operating exposure
D) translation exposure

Question

Quizplus · Accepted Answer

Translation exposure refers to the risk of changes in exchange rates that can affect the value of a company's foreign assets and liabilities when they are translated into the reporting currency for financial statement purposes. In this scenario, the company must represent its overseas assets on its balance sheet, which involves translation of the assets into the reporting currency. Therefore, the company faces translation exposure.

If a Company Has Overseas Assets and at a Future