Differences in Exchange Rates

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Posted on by Jerry Bismarck

When consolidating a company, it seems as though the convention is to value the balance sheet at the report date and the income statement on the average rate, but how is equity best dealt with in a BC consolidation? I see that different exchange rates are typically used, and most are straight-forward but I'm not entirely sure how the Composite rate and Equity rate would affect a consolidation? What are the differences between these two conventions?

Thank you,