When translating into the presentation currency the translation difference is recognised:

A) in retained earnings.
B) in profit or loss.
C) as a separate component of equity.
D) as an asset or liability, depending on whether it is a debit or credit balance.

According to International Accounting Standard (IAS) 21, translation differences arising from the translation of a foreign entity's financial statements into the presentation currency should be recognised as a separate component of equity, known as "Cumulative Translation Adjustment" (CTA). This is because translation differences are not real gains or losses but rather an accounting adjustment resulting from fluctuations in exchange rates, and therefore, should not be recognised in profit or loss.