Taking an excerpt here, Figure 15.2 clearly shows that under a Current Rate method and a Net Assets exposure, we gain when local currency appreciates.
However, if we look at EOC Q6 :-
6. How many of the following situations might result in a translation gain?
a)Total assets exceed total liabilities when the foreign currency is depreciating
using the current rate method.
b)Monetary liabilities exceed monetary assets when the foreign currency is
appreciating using the temporal method.
c)Monetary assets exceed monetary liabilities when the foreign currency is
depreciating using the temporal method.
d)Total assets equal total liabilities
NONE of the above results in translation gain! In (a), for example, it’s clearly stated that we are using the current rate method and we have a net asset exposure, which Figure 15.2 clearly states that it is a translation gain to us- therefore nullifying the EOC question. What madness.