Which of the following foreign currency transactions would be included in the equity section of a U.S.firm along with the cumulative translation adjustments?
A)Those used to hedge a net investment in a foreign entity
B)Those used to speculate in foreign exchange rates
C)Those used to hedge an exposed asset or liability position
D)Those used to hedge a future foreign currency commitment

Question

Which of the following foreign currency transactions would be included in the equity section of a U.S.firm along with the cumulative translation adjustments?
A)​Those used to hedge a net investment in a foreign entity
B)​Those used to speculate in foreign exchange rates
C)​Those used to hedge an exposed asset or liability position
D)​Those used to hedge a future foreign currency commitment

Quizplus · Accepted Answer

Transactions used to hedge a net investment in a foreign entity are considered part of the cumulative translation adjustment in the equity section of a U.S. firm's financial statements. These transactions reflect changes in the value of the firm's net investment in the foreign entity due to changes in exchange rates. Transactions used for speculation or hedging other positions would not be included in the equity section.

Which of the Following Foreign Currency Transactions Would Be Included