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On the other hand, due to the constant fluctuation of exchange rates, challenges emerge when it comes to accounting for foreign currency translations, leading to current and temporal translation methods. Firms might consider different rates for a specific date or period. The current translation method requires businesses to translate their financial statement items at the present rate of exchange, including possessions as well as liabilities. The volatility affiliated with the practice in exchange rates, the gains, and losses attributed to the translation technique is reported on the consolidated net income account’s reserve account. The temporal translation method facilitates adjusting the assets that generate income on the balance sheet as well as affiliated items in the income statement by employing past exchange rates from the last date a company evaluated the account’s fair market value or transaction dates.