What Exchange Rate to use for Intercompany

Leslie posted some excellent comments, which touched on the exchange rates to use on intercompany transactions, a very interesting and complex topic. I have discussed this at length with Seamus Moran many times, he has educated and enlightened me and I use an example of his here.

Consider Top Hat Global Corp

• The group reports to shareholders in Monopoly Money - MYM.


• Subsidiary N is a plant, and is located in Elbonia, where they use the Elbonian Enigmatic Krown, the EEK.


• They sell in all of the EUR countries.


• They ship from the plant to all of the EU countries.