*A. We fear a revaluation of the currency of the US affiliate the Japanese Yen.
1) Explicate how the USA should hedge its translation exposure through a balance sheet or forward hedge.
2) Discuss the implications of US hedging actions.
( Rubric: discuss the 2 methods offered for hedging to hedge the expected revaluation of the South African rand vis-à-vis the $.)
C. Elaborate on the temporal method of translation FE exposure. Define it and describe how it treats balance sheet, income statement and stockholders equity items.
(Rubric: expound on how FAS # 8 addresses translation issues and alteration of exchange rates in the income statement, balance sheet and Stockholders” equity statements.)
D. Expound on the current rate method of FE exposure. Define it and describe how it treats income statement, balance sheet and stockholders equity items.
(Rubric: expound on how FAS # 52 addresses translation issues and alteration of exchange rates in the income statement, balance sheet and Stockholders” equity statements.)
E. Explicate hedging translation exposure through the balance sheet and forward in the current rate and the temporal method. Evaluate them as a hedging tool.
(Rubric: explicate in both accounting approaches the quality of the two hedging techniques.)
