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CFA Level 2
Financial Reporting and Analysis

Translation Methods for Multinational Subsidiaries

Medium Multinational Operations Translation Methods

XYZ Corporation is a multinational company operating in both the United States and Europe. In preparing its consolidated financial statements, the company needs to translate the financial results of its European subsidiary, which operates in euros, into U.S. dollars. The company primarily uses the functional currency of its foreign subsidiary for translation into the reporting currency. Which translation method should XYZ Corporation apply for the financial statements of its European subsidiary?

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