Large corporations typically have operations in multiple countries. The following points outline the accounting processes for currency conversion of foreign based subsidiaries’ financial statements, so the subsidiaries’ financial results can be consolidated with the parent company.
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Presentation Currency vs. Functional Currency vs. Local Currency
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Foreign Currency Translation
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Temporal Method
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Current Rate Method
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Determining the Functional Currency
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Translation Methods and Financial Statement Effects
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Translation Methods and Financial Ratios
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Accounting for Subsidiaries in Hyperinflationary Economies
We will discuss these points in the following articles.