Reporting currency definition
/What is a Reporting Currency?
A reporting currency is the currency in which a parent organization prepares its financial statements. The reporting currency is usually the currency used in an organization's home country. In order to issue financial statements in its reporting currency, a multi-national firm must first convert the reporting of its subsidiaries in other countries to the reporting currency.
The issue of which currency to use as an entity’s reporting currency is of little concern to smaller businesses, which likely transact the vast majority of their transactions in a single currency. It is more of a concern for larger multi-national businesses, and especially those that have changed the country in which they are incorporated.
Example of a Reporting Currency
The Alaskan Barrel Company (ABC) has subsidiaries located in Japan and France. Its home office is located in the United States. In order to produce consolidated financial statements, ABC must first convert the financials of its Japanese subsidiary from yen to dollars, and convert the financials of its French subsidiary from euros to dollars. In this case, U.S. dollars are the reporting currency of ABC.