The Two Methods for the Translation of Foreign Subsidiary Financial

question 9

Essay

The two methods for the translation of foreign subsidiary financial statements are the current rate and temporal methods. Briefly, describe how each of these methods translates the foreign subsidiary financial statements into the parent company's consolidated statements. Identify when each technique should be used and the major advantage(s) of each.

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Definitions:

Mass

A measure of the amount of matter in an object, typically in kilograms or grams.

Powdered Material

Fine, dry particles produced by the grinding, crushing, or disintegration of a solid substance.

Density

A physical property of matter defined as the mass per unit volume.

Mass

A measure of the amount of matter contained in an object, commonly measured in kilograms or grams.