A U.S. company buys merchandise from a foreign company denominated in U.S. dollars. Which of the following statements is true? A) If the foreign currency appreciates, a foreign exchange gain will result. B) If the foreign currency depreciates, a foreign exchange gain will result. C) No foreign exchange gain or loss will result. D) If the foreign currency appreciates, a foreign exchange loss will result. E) Any gain or loss will be included in comprehensive income. A U.S. company buys merchandise from a foreign company denominated in the foreign currency. Which of the following statements is true? A) If the foreign currency appreciates, a foreign exchange gain will result B) If the foreign currency depreciates, a foreign exchange loss will result. C) No foreign exchange gain or loss will result. D) If the foreign currency appreciates, a foreign exchange loss will result. E) Any gain or loss will be included in comprehensive income. U.S. GAAP provides guidance for hedges of all the following sources of foreign exchange risk except A) Recognized foreign currency denominated assets and liabilities. B) Unrecognized foreign currency firm commitments. C) Forecasted foreign currency denominated transactions. D) Net investment in foreign operations. E) Deferred foreign currency gains and losses. In accounting, the term translation refers to A) The calculation of gains or losses from hedging transactions. B) The calculation of exchange rate gains or losses on individual transactions in foreign currencies. C) The procedure required to identify a company's functional currency. D) The calculation of gains or losses from all transactions for the year. E) A procedure to prepare a foreign subsidiary's financial statements for consolidation What is a company's functional currency? A) The currency of the primary economic environment in which it operates. B) The currency of the country where it has its headquarters. C) The currency in which it prepares its financial statements. D) The reporting currency of its parent for a subsidiary. E) The currency it chooses to designate as such AICPA: FN Measurement According to U.S. GAAP, when the local currency is the functional currency, which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency? A) The temporal method. B) The current rate method. C) The current concurrent method. D) The monetaryonmonetary method. E) The noncurrent rate method