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Group accounting – Foreign currency

Exchange differences

2.1 Exchange differences

Goodwill

This is retranslated each
year at the closing rate.

Exchange
differences

Profit

Opening net assets This is translated in the
P/L (and so hits reserves)
These are retranslated at the average rate.
each year at the closing However, profit increases
rate. assets which are
translated at the closing
rate.

These exchange differences are recognised in other comprehensive
income.

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