Translation exposure occurs when the subsidiary's results are consolidated at the corporate level.

Question

Quizplus · Accepted Answer

Translation exposure refers to the risk that a company's financial statements and consolidated financial statements may be affected by fluctuations in exchange rates. This occurs when a company has subsidiaries operating in foreign countries and their financial results must be converted into the parent company's reporting currency for consolidation purposes. Therefore, translation exposure is directly related to consolidation at the corporate level.

Translation Exposure Occurs When the Subsidiary's Results Are Consolidated at the Corporate