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7. Determinants of transiation exposure G1EP: 2 of3 Accounting standards and procedures in the United States have a major influence on the transiation exposure of
7. Determinants of transiation exposure G1EP: 2 of3 Accounting standards and procedures in the United States have a major influence on the transiation exposure of U.9.based MNCs. One such standard is the requiremant that MNCs use a weighted average exchange rate when consolidating financial statements from foreign subsidiaries. Suppose that Canton Co. is a U.S.-based MNC with a foreign subsidiary in Germany, which deais in euros. The local eamings of this German subsidiary oyer a two-year period are shown in the following table, along with the weighted average exchange rate of the euro. Far a orh nf the two vears. enter the translated earnings for the German subsidiary (in dollars) in the last colimn of the table
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