Presentation currency
The currency in which a group presents its consolidated financial statements. A subsidiary's statements are translated into it when its functional currency is different.
Where you will meet it
Presentation currency appears in 3 learning outcomes on the CFA syllabus. A few of them:
- Contrast presentation (reporting), functional and local currencies
“The presentation currency is the one the parent uses for its group accounts.”
- Analyse how exchange rate movements change the translated sales of a subsidiary and of its parent
“Translated sales growth equals (1 + local currency growth) × (1 + change in the foreign currency's value against the presentation currency) − 1, where the change is measured using the rate in presentation currency per unit of foreign currency.”
- Work out translation effects and assess how the income statement and balance sheet of a subsidiary are restated in the parent's presentation currency
“Rates quoted as presentation currency per foreign unit are multiplied; a rate quoted the other way must be divided, and mixing these up is the classic error.”
See also
Practise it
Practise presentation currency until it is automatic: questions that explain every wrong option.
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