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What is the difference between accounting for foreign currency transactions and foreign currency translations?

April 26, 2017Accounting currency difference foreign transactions translations

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What is the difference between accounting for foreign currency transactions and foreign currency translations?

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The main difference between accounting for foreign currency transactions and foreign currency translations is that a transaction is recorded in the currency in which it was purchased; whereas translation occurs when items purchased by foreign subsidiaries are translated into the firm’s home-country financial statements under the established accounting principles for the country.