ABSTRACT
FOREIGN CURRENCY TRANSLATION In recent years many companies have acquired foreign businesses or built up their foreign interests from retained profits. As a result numerous multinational companies have emerged, each controlling many foreign enterprises. Accounting for such groups poses problems, especially when foreign exchange rates fluctuate. Groups must translate foreign subsidiaries’ accounts into the holding company’s domestic currency. There are two ways to do this: the ‘closing rate’ method and the ‘temporal’ method.
