Consider two different foreign subsidiaries of Georgia-Pacific Wood Products Inc. The first subsidiary mills trees in Canada and ships its entire product to the Georgia-Pacific U.S. The second subsidiary is also owned by the parent firm but is located in Japan and retails tropical hardwood furniture that it buys from many different sources. The first subsidiary is likely a/an………foreign entity with most of its cash flows in U.S. dollars, and the second subsidiary is more of a/an ……..foreign entity.

Under the current rate method, specific assets and liabilities are translated at exchange rates consistent with the timing of the item's creation.

A foreign subsidiary's ………currency is the currency used in the firm's day-to-day operations.

A/an …….subsidiary is one in which the firm operates as an extension of the parent company with cash flows highly interrelated with the parent.

The basic advantage of the …….. method of foreign currency translation is that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement while the most important advantage of the ……… method is that the gain or loss from translation does not pass through the income statement.

Generally speaking, translation methods by country define the translation process as a function of what two factors?

The current rate method of foreign currency translation gains or losses resulting from remeasurement are carried directly to current consolidated income and thus introduces volatility to consolidated earnings.

Translation exposure measures