Chapter 10, Problem 2DYS

RESEARCH CASE 2—FOREIGN CURRENCY TRANSLATION DISCLOSURES IN THE COMPUTER INDUSTRY

 Many companies make annual reports available on their corporate website, often under an Investors tab. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filings, click Company Filings Search, type in Company Name, and under Filing Type, search for 10-K).

  Access the most recent annual report for the following U.S.-based multinational corporations to complete the requirements:

  International Business Machines Corporation.

  Intel Corporation.

  Required

1. a. Identify the location(s) in the annual report that provides disclosures related to foreign currency translation and foreign currency hedging.
2. b. Determine whether the company’s foreign operations have a predominant functional currency.
3. c. Determine the amount of translation adjustment, if any, reported in other comprehensive income in each of the three most recent years. Explain the sign (positive or negative) of the translation adjustment in each of die three most recent years. Compare the relative magnitude of these translation adjustments for the two companies.
4. d. Determine whether each company hedges net investments in foreign operations. If so, determine the type(s) of hedging instrument used.