A Comparative Study of the Application of Temporal Method and Current Rate Method



The foreign currency statement translation problem has been listed as one of the financial accounting problems since its inception. The conversion methods used by each country in the translation of foreign currency statements vary from country to country, but can be roughly classified into two methods: temporal method and current rate method. The temporal method matches the popular parent company theory, and the current rate method matches the entity theory. Currently the temporal method and the current rate method are two popular but opposite conversion methods. This paper first analyzes and compares the similarities and differences in accounting treatment between the current rate method and the temporal method, and then further argues the negative comments of the temporal method and the positive evaluation of the current rate method, thirdly improves the use of the tense method, finally from the perspective of China's national conditions, discusses that the use of the tense method is more in line with China's economic environment.


Statement conversion, Temporal method, Current rate method, Parent company theory, Entity theory.Text


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