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ASC 830 — Foreign Currency Matters

Below is an overview of FASB Accounting Standards Codification Topic 830, Foreign Currency Matters, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic.

Overview

ASC 830 comprises five Subtopics (Overall, Foreign Currency Transactions, Translation of Financial Statements, Statement of Cash Flows, and Income Taxes). Below is an overview of each Subtopic.

830-10 Overall

ASC 830-10 provides general guidance on foreign currency issues, including guidance on determining "how a reporting entity determines the functional currency of a foreign entity (including of a foreign entity in a highly inflationary economy), remeasures the books of record (if necessary), and characterizes transaction gains and losses."

830-20 Foreign Currency Transactions

ASC 830-20 notes the following:

 

This Subtopic establishes standards of financial accounting and reporting for foreign currency transactions in financial statements of a reporting entity.

Foreign currency transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. Examples include a sale denominated in Swiss francs, a Swiss franc loan, and the holding of Swiss francs by an entity whose functional currency is the dollar. Likewise, a Swiss franc denominated transaction by a German entity or other entity whose functional currency is not the Swiss franc is a foreign currency transaction. For any entity whose functional currency is not the dollar, a dollar-denominated transaction is also a foreign currency transaction.

830-30 Translation of Financial Statements

ASC 830-30 notes the following:

 

This Subtopic provides guidance for translating foreign currency statements that are incorporated in the financial statements of a reporting entity by consolidation, combination, or the equity method of accounting.

830-230 Statement of Cash Flows

ASC 830-230 discusses guidance on including foreign currency matters in an entity's state of cash flows.

830-740 Income Taxes

ASC 830-740 notes the following:

 

This Subtopic addresses the accounting for specific types of basis differences for entities operating in foreign countries. The accounting addressed in this Subtopic is limited to the deferred tax accounting for changes in tax or financial reporting bases due to their restatement under the requirements of tax laws or generally accepted accounting principles (GAAP) in the United States. These changes arise from tax or financial reporting basis changes caused by any of the following:

  1. Changes in an entity’s functional currency
  2. Price-level related changes
  3. A foreign entity’s functional currency being different from its local currency.

This Subtopic addresses whether these changes, which can affect the amount of basis differences, result in recognition of changes to deferred tax assets or liabilities.

The full text of ASC 830 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

Content from the FASB Accounting Standards Codification® included at http://www.usgaapplus.com is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

The following ASUs amended the guidance in this Topic:

Proposed FASB Accounting Standards Updates

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.