Foreing branches-branches, Financial Accounting

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FOREING BRANCHES

The head office my set up a branch in a foreign  country. IAS 21 requires that the results of that  foreign branch to be translated into the local currency for the purpose of preparing the financial  statements for the whole business.

There are two main ways of translating the results of the branch ;

  • The functional currency method. (formerly temporal method)
  • Presentation method (formerly closing rate or net investment method)

 


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