Definition for : Closing rate method

Under the closing rate method, all Assets and Liabilities, as well as Income statement items are translated at the closing rate which is the rate of exchange at the Balance sheet date. This method of Currency translation is used when the Subsidiary is economically and financially independent of its Parent company. The closing rate method is also called the Current rate method.

(See Chapter 6 Getting to grips with consolidated accounts of the Vernimmen)

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