Lesson 21 of 30

Financial Statement Consolidation of Multinational Operations

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Consolidation: Presentation Currency vs. Functional Currency vs. Local Currency

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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.

Presentation Currency vs. Functional Currency vs. Local Currency
Foreign Currency Translation
Temporal Method
Current Rate Method

Determining the Functional Currency
Translation Methods and Financial Statement Effects
Translation Methods and Financial Ratios
Accounting for Subsidiaries in Hyperinflationary Economies

We will discuss these points in the following articles.