Thornton Corporation has extensive liabilities denominated in Cyprus pounds resulting from imports from Cyprus. However, Thornton's revenues are denominated solely in U.S. dollars. Which of the following is probably not true?

Question

Quizplus · Accepted Answer

Thornton Corporation has translation exposure as it is exposed to the risk of losses or gains resulting from the translation of its liabilities from Cyprus pounds to US dollars for accounting purposes. However, as Thornton's revenues are denominated solely in US dollars, it does not have transaction or economic exposure. Thornton would benefit from a depreciation of the Cyprus pound due to the reduction in the value of its liabilities when translated to US dollars.

Thornton Corporation Has Extensive Liabilities Denominated in Cyprus Pounds Resulting