When would the balance sheet exposure arising from the current rate method become realized?
A. It is realized once the financial statements of the subsidiary and the parent are consolidated.
B. It is realized any time the historical exchange rate is different from the spot rate at the balance sheet date.
C. It is realized when the subsidiary is sold at book value and the proceeds are converted to parent company currency.
D. It can never be realized because it is only the result of the choice of accounting methods and does not reflect real exposure.
Answer:C
When would the balance sheet exposure arising from the current rate method become realized?
A. It is realized once the financial statements of the subsidiary and the parent are consolidated. B. It is realized any time the historical exchange rate is different from the spot rate at the balance sheet date. C. It is realized when the subsidiary is sold at book value and the proceeds are converted to parent company currency. D. It can never be realized because it is only the result of the choice of accounting methods and does not reflect real exposure.