Respuesta :
For the accurate translation of a foreign entity's financial statement, the weightage average is the combination of accounts and exchange rates.
The process of converting the functional currency financial statements of a foreign entity to the reporting entity's financial statements is known as currency translation.
Assets and liabilities are converted at current exchange rates rather than historical ones when using the current rate approach as opposed to the temporal (historical) method. As a result, there is a significant chance that the current exchange rate will change.
Gains and losses related to this translation are recorded on a reserve account rather than the consolidated net income account, which is utilized in the temporal method, in order to assist reduce this volatility.
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