Since translation exposure,a category of foreign exchange risk,is concerned with the present measurement of past events,the resulting accounting gains or losses are said to be unrealized,and therefore unimportant.

Question

Quizplus · Accepted Answer

Accounting gains or losses resulting from translation exposure are considered realized, as they are reflected in the financial statements. However, they may not have a direct impact on the cash flows of the company, making them less significant in terms of managing foreign exchange risk.

Since Translation Exposure,a Category of Foreign Exchange Risk,is Concerned with the Present