Although a company would never dispel gains from currency fluctuations, they truly hate accounting for the losses. This is why minimizing risk is so important. It is absolutely necessary to retain a firm’s profits from selling a product or providing a service. Please consider the following questions:
- What is the purpose of a hedge?
- How does a hedge operate?
- Provide an example of three hedging strategies.
- Of the three, which do you prefer?
Translation and Remeasurement
In viewing how to restate financial statements, there are two major processes. The first is known as translation and the second is known as remeasurement. You will look at these two processes as you answer the following questions:
- What is the translation method and when is it used?
- What is the remeasurement process and when is it used?
- Which is the most common in today’s business practices and which do you prefer?