Currency Translation

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DEFINITION

The process of quoting the amount of money denominated in one currency in the denomination of another currency on a balance sheet. Currency translation is done using current exchange rates. The Financial Accounting Standards Board (FASB) requires multinational corporations to list all assets and liabilities in terms of its native currency.

INVESTOPEDIA EXPLAINS

The currency translation is recorded on the corporate balance sheet as an equity account. Large banks include foreign adjusted currency translation as equity capital. Corporations must report any earnings from foreign subsidiaries in their translations, as well.


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