# ASC Topic 255: Changing Prices Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/255/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:18:00.706Z to 2026-09-09T23:18:39.807Z Record version: sha256:e6e6dfda8bd04394be22ed733644f71e50099956201db1fe93c694b2815ce1cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 255 covers voluntary supplementary disclosure of the effects of changing prices (inflation) on financial statements. ASC 255-10 encourages — but does not require — business entities reporting in U.S. dollars to present a five-year summary of current cost/constant purchasing power data (255-10-15-3; 255-10-50-1, 50-3), and supplies the measurement mechanics: current cost or lower recoverable amount for inventory and PP&E (255-10-50-20, 50-36 through 50-37), restatement of only cost of goods sold and depreciation, depletion, and amortization (255-10-50-39 through 50-40) with no adjustment to income tax expense (255-10-50-41), CPI-U restatement, translate-restate vs. restate-translate methods for foreign functional currency operations (255-10-50-45 through 50-49), and computation of the purchasing power gain or loss on net monetary items (255-10-50-50; 255-10-55-1 through 55-13). ASC 255-912 layers on an industry rule for federal government contractors that elect to make these disclosures: contract inventories, fixed-price contract advances, and warranty obligations are nonmonetary, while accrued losses on contracts are monetary (255-912-50-1). The central idea is that the monetary/nonmonetary classification of each balance sheet item drives the purchasing power gain or loss, the key inflation-effect metric. Source downloaded (UTC): 2026-09-09T23:18:00.706Z to 2026-09-09T23:18:30.447Z Record version: sha256:21ed36072751513678e50dbec75f02ea3c6490a3e53e9b849a0526b7ba26f5b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10: Changing Prices — Overall ### Machine-generated study aids ```json { "summary": "ASC 255-10 governs supplementary disclosure of the effects of changing prices (inflation) on financial statements. Business entities reporting in U.S. dollars under GAAP are *encouraged but not required* to disclose a five-year summary of current cost-constant purchasing power data — including income from continuing operations on a current cost basis, purchasing power gain or loss on net monetary items, and the inflation-adjusted change in the current cost of inventory and PP&E. The Subtopic also supplies the measurement rules for current cost and lower recoverable amount, the CPI-U restatement mechanics, the translate-restate vs. restate-translate methods for foreign functional currency operations, and guidance on classifying balance sheet items as monetary or nonmonetary.", "key_points": [ "Disclosure of the effects of changing prices is encouraged but not required (255-10-15-3; 255-10-50-1), and entities may experiment with other forms of disclosure.", "If provided, the five-year summary must show net sales, income from continuing operations on a current cost basis, purchasing power gain or loss on net monetary items, the increase/decrease in current cost or lower recoverable amount of inventory and PP&E net of inflation, any current cost translation adjustment, year-end net assets, per-share income, dividends declared per share, and year-end market price per share (255-10-50-3), plus the CPI-U levels used (255-10-50-8).", "Inventory is measured at current cost or lower recoverable amount at the measurement date and PP&E at the current cost or lower recoverable amount of the assets' remaining service potential (255-10-50-20); current cost may be estimated by indexation or direct pricing (255-10-50-23).", "Only cost of goods sold and depreciation, depletion, and amortization must be restated to current cost; other revenues, expenses, gains, and losses may be taken from the primary income statement (255-10-50-39 through 50-40), and income tax expense is not adjusted or allocated (255-10-50-41).", "Recoverable amount is measured by value in use unless the asset is about to be sold, in which case fair value less costs to sell is used; a materially and permanently lower recoverable amount for a group of assets must be used as the measure (255-10-50-36 through 50-37).", "For operations in a foreign functional currency, general inflation effects are measured either after translation using CPI-U (translate-restate) or before translation using a functional currency general price level index (restate-translate), applied consistently to all such operations and periods (255-10-50-45 through 50-46); the restate-translate method requires a parity adjustment (255-10-50-49).", "The purchasing power gain or loss on net monetary items is the net gain or loss from restating opening and closing balances of, and transactions in, monetary assets and liabilities into units of constant purchasing power (255-10-50-50); classification guidance for monetary vs. nonmonetary items appears in 255-10-55-1 through 55-13 (e.g., a sales-type lease receivable is monetary, an unguaranteed residual asset is nonmonetary)." ], "categories": [ "Disclosure", "Presentation", "Foreign currency", "Subsequent measurement" ], "audience_level": "advanced", "student_note": "The single most important takeaway is that all of this inflation reporting is voluntary — an exam trap is treating the detailed five-year summary in 255-10-50-3 as a mandatory disclosure. The monetary/nonmonetary classification guidance in 255-10-55-1 through 55-13 is the piece most often cited elsewhere in GAAP (e.g., highly inflationary economies and nonmonetary exchanges).", "related_topics": [ "830-10", "830-30", "932-235", "912-255", "842-30", "360" ], "key_concepts": [ "current cost", "constant purchasing power", "purchasing power gain or loss", "monetary and nonmonetary items", "lower recoverable amount", "consumer price index for all urban consumers", "translate-restate and restate-translate methods", "supplementary disclosure" ] } ``` Source downloaded (UTC): 2026-09-09T23:18:00.706Z to 2026-09-09T23:18:00.706Z Record version: sha256:d745702cf5631c7da7bf285ac54daab7978a1ed98a15dcfbc862f9fcef226f16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/255/10/#00-status) SEC content: no ##### [255-10-00-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:00.706Z to 2026-09-09T23:18:00.706Z Record version: sha256:c53ca16bf33c7fc412521d7ec14b421dd19ff8627be188e2944b199039e24478 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Current Market ValueSupersededAccounting Standards Update No. 2012-0410/01/2012
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
Income from Continuing OperationsAmendedAccounting Standards Update No. 2015-0101/09/2015
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ReceivableAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Leveraged LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Net Investment in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Unguaranteed Residual AssetAddedAccounting Standards Update No. 2016-0202/25/2016
255-10-50-36AmendedAccounting Standards Update No. 2012-0410/01/2012
255-10-55-2AmendedAccounting Standards Update No. 2015-1006/12/2015
255-10-55-2AmendedAccounting Standards Update No. 2012-0410/01/2012
255-10-55-6AmendedMaintenance Update 2020-18 (PDF)11/25/2020
255-10-55-6AmendedAccounting Standards Update No. 2016-0202/25/2016
255-10-55-7AAddedAccounting Standards Update No. 2016-0202/25/2016
255-10-55-8AmendedAccounting Standards Update No. 2016-0202/25/2016
255-10-55-10AmendedAccounting Standards Update No. 2016-0202/25/2016
255-10-55-11AmendedAccounting Standards Update No. 2016-0202/25/2016
255-10-55-12AmendedAccounting Standards Update No. 2010-0802/02/2010
Source downloaded (UTC): 2026-09-09T23:18:04.351Z to 2026-09-09T23:18:04.351Z Record version: sha256:a1b1c9604db211134b1abf1affe2c6e001093543d055179f862d3921e79e8664 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/255/10/#05-overview-and-background) SEC content: no ##### [255-10-05-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:04.351Z to 2026-09-09T23:18:04.351Z Record version: sha256:e051efa3e0cd38d1dcbfc5b0f9c4ce692e7ddb23795e7d40f05ca95beaac7889 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Changing Prices Topic provides guidance on reporting the effects of changing prices, or inflation, on financial statements of business entities. The reporting addresses both general inflation and price changes of certain assets. Source downloaded (UTC): 2026-09-09T23:18:07.612Z to 2026-09-09T23:18:07.612Z Record version: sha256:b7dd34536c151fd0df6b2e3cdecb4ca46e749453fcafc29a8827dd0a61da9276 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/255/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [255-10-15-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:07.612Z to 2026-09-09T23:18:07.612Z Record version: sha256:30a4006003e51fc5c95d1ca1d26553e8cef67fce53b70074462a6b8df947617d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for the Changing Prices Topic. #### Entities ##### [255-10-15-2](https://asc.understandingaccounting.org/asc/255/10/#255-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:07.612Z to 2026-09-09T23:18:07.612Z Record version: sha256:7ee923ec1206565a07095c24206457a4050b1120aebbe249ae28855e9cdbb379 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Changing Prices Topic applies to the following entities: 1. a Business entities that prepare their financial statements in U.S. dollars and in accordance with U.S. generally accepted accounting principles (GAAP) 2. b Foreign entities that prepare financial statements in the currency of the country in which the operations reported on are conducted and that operate in countries with hyperinflationary economies. ##### [255-10-15-3](https://asc.understandingaccounting.org/asc/255/10/#255-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:07.612Z to 2026-09-09T23:18:07.612Z Record version: sha256:886b1514ddf09dbb87ff2591c1d43e1bedbac66b5b3077a36bcc3a807c728790 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosure of information on the effects of changing prices as outlined in this Topic is encouraged, but not required. Source downloaded (UTC): 2026-09-09T23:18:14.222Z to 2026-09-09T23:18:14.222Z Record version: sha256:4613c27ae3af90b1aa204bb9a5d953443faf81e598de93687e79a5d681d4df57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/255/10/#30-initial-measurement) SEC content: no ##### [255-10-30-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:14.222Z to 2026-09-09T23:18:14.222Z Record version: sha256:d398934bf44d9a3d094c57195c66484dac89483b66075a12b727dea6588888e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on encouraged disclosures on the effects of changing prices. For that reason, the guidance that describes how to measure items provided in the disclosures is included in paragraphs [255-10-50-19 through 50-55](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-19) rather than this Section. Source downloaded (UTC): 2026-09-09T23:18:16.743Z to 2026-09-09T23:18:16.743Z Record version: sha256:6d2f7b6a3acb275deb86d8d4b6cb0b2f9863a6bedea8ca24df033d745bcd762f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/255/10/#35-subsequent-measurement) SEC content: no ##### [255-10-35-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:16.743Z to 2026-09-09T23:18:16.743Z Record version: sha256:a5a412f1a6498dedfc1ee3571037956956503c0e99419fecc6ed14befc48040e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on encouraged disclosures on the effects of changing prices. For that reason, the guidance that describes how to measure items provided in the disclosures is included in paragraphs [255-10-50-19 through 50-55](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-19) rather than this Section. Source downloaded (UTC): 2026-09-09T23:18:20.302Z to 2026-09-09T23:18:20.302Z Record version: sha256:cb05a719c41ea2dff1bc6ed823a0df45c1af6d4627688ee15de366f323d1c33a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/255/10/#45-other-presentation-matters) SEC content: no ##### [255-10-45-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:20.302Z to 2026-09-09T23:18:20.302Z Record version: sha256:ada82035d3c1f9950b467879085344c0804c3ba40e7295b9249c152c03489224 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on encouraged disclosures on the effects of changing prices. For that reason, the guidance that describes how to present the disclosures is included in Section 255-10-50 rather than this Section. #### Price-Level Adjusted Financial Statements for Certain Entities in Highly Inflationary Economies ##### [255-10-45-2](https://asc.understandingaccounting.org/asc/255/10/#255-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:20.302Z to 2026-09-09T23:18:20.302Z Record version: sha256:9d9ec63de530409163385e73cae24a4ffdf3f0562aaeb41d6931bb3bb01bcd2b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The degree of inflation or deflation in an economy may become so great that conventional statements lose much of their significance and general price-level statements clearly become more meaningful. Although this is obvious with respect to some countries, the degree of inflation or deflation at which general price level statements clearly become more meaningful depends on the circumstances. ##### [255-10-45-3](https://asc.understandingaccounting.org/asc/255/10/#255-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:20.302Z to 2026-09-09T23:18:20.302Z Record version: sha256:c6bb07facb67136591781cfb5cc43a097a046feba1945b2e0588217fa65d35e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic permits a comprehensive application of price-level adjusted financial statements (to the extent such presentation is not inconsistent with guidance in this Subtopic regarding [historical cost-constant purchasing power accounting](https://asc.understandingaccounting.org/glossary/h/#historical-cost-constant-purchasing-power-accounting "A method of accounting based on measures of historical prices in units of a currency, each of which has the same general purchasing power."), such as the classification of assets and liabilities as monetary or nonmonetary) in presenting the basic foreign currency financial statements of entities operating in countries with highly inflationary economies if the statements are intended for readers in the United States. ##### [255-10-45-4](https://asc.understandingaccounting.org/asc/255/10/#255-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:20.302Z to 2026-09-09T23:18:20.302Z Record version: sha256:4a0eb41385199b852b3dcdc13bc77f843e384b5de8eb9d7bddae899749655715 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance applies only to statements prepared in the currency of the country in which the operations reported on are conducted. Only conventional statements of foreign subsidiaries should be used to prepare historical-dollar consolidated statements. Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:7cefba46a36be4a10ebaa22ce3dfb1d7cbe6aa85fe83fcc257577342dd4308bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/255/10/#50-disclosure) SEC content: no #### Introduction ##### [255-10-50-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:90f0de2b311b5efc1d544a34b88943e30a24a442762e4871bc56bc72a3d47b83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business entity that prepares its financial statements in U.S. dollars and in accordance with U.S. generally accepted accounting principles (GAAP) is encouraged, but not required, to disclose supplementary information on the effects of changing prices. Entities are not discouraged from experimenting with other forms of disclosure. #### Presentation ##### [255-10-50-2](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:ce08065fabad92801684050347349299fa1859e8206ba7b6ae12c183c522956c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on those encouraged disclosures. For that reason, the guidance that describes how to present the disclosures is included in this Section rather than Section 250-10-45. ##### [255-10-50-3](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:c26e2203ba7b050e355af81d09c8cc5cf5897a3b0eb6fa1073b7214dae9d4bcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose all of the following information for each of the five most recent years: 1. a Net sales and other operating revenues 2. b [Income from continuing operations](https://asc.understandingaccounting.org/glossary/i/#income-from-continuing-operations "Income after applicable income taxes but excluding the results of discontinued operations, the cumulative effect of accounting changes, translation adjustments, purchasing power gains and losses on monetary items, and increases and decreases in the current cost or lower recoverable amount of nonmonetary assets and liabilities.") on a current cost basis 3. c [Purchasing power gain or loss](https://asc.understandingaccounting.org/glossary/p/#purchasing-power-gain-or-loss "The net gain or loss determined by restating in units of constant purchasing power the opening and closing balances of, and transactions in, monetary assets and liabilities.") on net monetary items 4. d Increase or decrease in the current cost or lower [recoverable amount](https://asc.understandingaccounting.org/glossary/r/#recoverable-amount "Current worth of the net amount of cash expected to be recoverable from the use or sale of an asset.") of inventory and property, plant, and equipment, net of inflation 5. e The aggregate foreign currency [translation adjustment](https://asc.understandingaccounting.org/glossary/t/#translation-adjustments "Translation adjustments result from the process of translating financial statements from the entity's functional currency into the reporting currency.") on a current cost basis, if applicable 6. f Net assets at year-end on a current cost basis 7. g Income per common share from continuing operations on a current cost basis 8. h Cash dividends declared per common share 9. i Market price per common share at year-end. ##### [255-10-50-4](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:8fc2c4d1c6f26644414864b221d7a9f092e4a29257bd4868466e316110f63ad7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the purposes of this Subtopic, except where otherwise provided, inventory and property, plant, and equipment shall include land and other natural resources and capitalized leasehold interests but not goodwill or other intangible assets. ##### [255-10-50-5](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:34025c252206d9a0b943ba4b31970af97ebd6288cd6dbf9258188f5fbbb9542c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that presents consolidated financial statements shall present the information required by this Subtopic on the same consolidated basis. The information required by this Subtopic need not be presented for a parent company, an investee company, or other entity in a financial report that includes the results for that entity in consolidated financial statements. ##### [255-10-50-6](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:79f5a53692776a7b0e9f5cd6a911996fa29ded233d3bcdcb396519c1d2c9b117 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The information required by this Subtopic shall be presented as supplementary information in any published annual report that contains the primary financial statements of the entity except that the information need not be presented in an interim financial report. The information required by this Subtopic need not be presented for segments of a business entity although such presentations are encouraged. ##### [255-10-50-7](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:d62b2c98b5d3b702d60ab2b83e5aeed786682891fa6e522bd3592d17595f37b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The information presented in the five-year summary shall be stated as either of the following: 1. a In average-for-the-year or end-of-year units of constant purchasing power 2. b In dollars having a purchasing power equal to that of dollars of the base period used by the Bureau of Labor Statistics in calculating the [Consumer Price Index for All Urban Consumers](https://asc.understandingaccounting.org/glossary/c/#consumer-price-index-for-all-urban-consumers "An index of price level changes affecting consumers generally, often used to measure changes in the general purchasing power of the monetary unit itself."). As a practical matter, this option is not available to entities that measure a significant part of their operations in one or more functional currencies other than the U.S. dollar and that elect to use the [restate-translate](https://asc.understandingaccounting.org/glossary/r/#restate-translate "An approach to converting current cost-nominal functional currency data of a foreign operation into units of constant purchasing power expressed in dollars. Using this approach, the current cost-nominal functional currency data are restated into units of constant purchasing power using a general price index for the foreign currency. After restatement into units of constant functional currency purchasing power, the current cost data are translated into dollars. This approach often necessitates a parity adjustment.") method for measuring inflation-adjusted current cost information. ##### [255-10-50-8](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:f9f284d44b9c4bb24c2260e2ac5fd55fa4586a037c03a67f325907f622c0d210 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the level of the Consumer Price Index for All Urban Consumers used for each of the five most recent years. If the level of the Consumer Price Index at the end of the year and the data required to compute the average level of the index over the year have not been published in time for preparation of the annual report, they may be estimated by referring to published forecasts based on economic statistics or by extrapolation based on recently reported changes in the index. ##### [255-10-50-9](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:d3cf9a76e049bb969063ded18667539b4f883becab98852b1590343254f21533 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the entity has a significant foreign operation measured in a functional currency other than the U.S. dollar, it shall disclose whether adjustments to the current cost information to reflect the effects of general inflation are based on the Consumer Price Index for All Urban Consumers (the [translate-restate](https://asc.understandingaccounting.org/glossary/t/#translate-restate "An approach to converting current cost-nominal functional currency data of a foreign operation into units of constant purchasing power expressed in dollars. Using this approach, the current cost-nominal functional currency data are first translated into dollars and then restated into units of constant purchasing power using the Consumer Price Index for All Urban Consumers.") method) or on a functional currency general price level index (the restate-translate method). ##### [255-10-50-10](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:1a96815e404a9663422a0a431f85a99a4ca1913d747383a62b7d7ca41d747229 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity shall provide an explanation of the disclosures required by this Subtopic and a discussion of their significance in the circumstances of the entity. Disclosure and discussion of additional information to help users of the financial report understand the effects of changing prices on the activities of the entity are encouraged. ##### [255-10-50-11](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:e066566dd06e9aba50ffb5e546c33b5eb19342195bb37ad7d5ea7fb0e69e94e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to the information required by paragraphs [255-10-50-3 through 50-10](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-3) , an entity shall provide the information specified in paragraphs [255-10-50-12 through 50-16](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-12) if income from continuing operations on a [current cost-constant purchasing power](https://asc.understandingaccounting.org/glossary/c/#current-cost-constant-purchasing-power-accounting "A method of accounting based on measures of current cost or lower recoverable amount in units of currency, each of which has the same general purchasing power. For operations in which the dollar is the functional currency, the general purchasing power of the dollar is used and the Consumer Price Index for All Urban Consumers is the required measure of purchasing power. For operations in which the functional currency is other than the dollar, the general purchasing power of either the dollar or the functional currency is used (see paragraphs 255-10-50-45255-10-50-46255-10-50-47).") basis would differ significantly from [income from continuing operations](https://asc.understandingaccounting.org/glossary/i/#income-from-continuing-operations "Income after applicable income taxes but excluding the results of discontinued operations, the cumulative effect of accounting changes, translation adjustments, purchasing power gains and losses on monetary items, and increases and decreases in the current cost or lower recoverable amount of nonmonetary assets and liabilities.") in the primary financial statements. ##### [255-10-50-12](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:a235f2b8fe6ce979ccadbf840adee8a423b74b0cadae8298034f59792d0e3545 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose certain components of income from continuing operations for the current year on a current cost basis (see paragraphs [255-10-50-39 through 50-41](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-39) ), applying the same constant purchasing power option used for presentation of the five-year summary. The information may be presented in any of the following formats: 1. a In a statement format (disclosing revenues, expenses, gains, and losses) 2. b In a reconciliation format (disclosing adjustments to the income from continuing operations that is shown in the primary income statement) 3. c In notes to the five-year summary required by paragraph [255-10-50-3](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-3). ##### [255-10-50-13](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:46c428b2d5200210f22246721fefdb14f9067ccad2383241eeedb898a1f1cf27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Formats for presenting the supplementary information are illustrated in Example 1 (see paragraphs [255-10-55-14 through 55-21](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-14) ). Whichever format is used, the presentation shall disclose (for example, in a reconciliation format) or allow the reader to determine (for example, in a statement format) the difference between the amount in the primary statements and the current cost amount of all of the following items: 1. a Cost of goods sold and depreciation 2. b Depletion 3. c Amortization expense. ##### [255-10-50-14](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:e64c8cfb95b21b4d0bbe0ab6932a5e67a01c0d45ecf5f7695d04de1d7fdb301f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If depreciation has been allocated among various expense categories in the supplementary computations of income from continuing operations (for example, among cost of goods sold and other functional expenses), the aggregate amount of depreciation on a current cost basis shall be included in the notes to the supplementary information. In addition to information about income from continuing operations, the entity may include the following items in a schedule of current year information: 1. a The purchasing power gain or loss on net monetary items 2. b The increase or decrease in the current cost or lower recoverable amount of inventory and property, plant, and equipment, net of inflation 3. c The translation adjustment. ##### [255-10-50-15](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:cfda7895abb1532a4c7f433a328096821f07d76a7f058e30b20025be3b2e7eeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As illustrated in Example 1 (see paragraphs [255-10-55-14 through 55-21](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-14) ), income from continuing operations does not include the information that is described in paragraph [255-10-50-14(a) through 50-14(c)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-14). ##### [255-10-50-16](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:ba7e586ef94390ae23fe335097da1b609bdcf675ed10d8575add3260bd50e433 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall also disclose all of the following: 1. a Separate amounts for the current cost or lower recoverable amount at the end of the current year of inventory and property, plant, and equipment (see paragraphs [255-10-50-20 through 50-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-20) and [255-10-50-36 through 50-38](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-36) ) 2. b The increase or decrease in current cost or lower recoverable amount before and after adjusting for the effects of inflation of inventory and property, plant, and equipment for the current year (see paragraphs [255-10-50-42 through 50-43](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-42) ) 3. c The principal types of information used to calculate the current cost of inventory; property, plant, and equipment; cost of goods sold; and depreciation, depletion, and amortization expense (see paragraphs [255-10-50-24 through 50-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-24) ) 4. d Any differences between: 1. 1 The depreciation methods, estimates of useful lives, and salvage values of assets used for calculations of current cost-constant purchasing power depreciation 2. 2 The methods and estimates used for calculations of depreciation in the primary financial statements (see paragraph [255-10-50-29](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-29)). ##### [255-10-50-17](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:08b6d604df3ebacb94e8ca16cbb6fa18135fe54eaa98481612d1eb52e8e25aea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For its mineral reserves other than oil and gas, an entity shall disclose all of the following additional information for each of its five most recent fiscal years: 1. a Estimates of significant quantities of [proved](https://asc.understandingaccounting.org/glossary/p/#proven-reserves "Proven reserves are reserves for which both of the following conditions are met: Quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from the results of detailed sampling. The sites for inspection, sampling, and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well established.") mineral reserves or proved and [probable](https://asc.understandingaccounting.org/glossary/p/#probable-reserves "Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.") mineral reserves (whichever is used for cost amortization purposes) at the end of the year or at the most recent date during the year for which estimates can be made (if estimates are not made as of the end of the year, the disclosures shall indicate the dates of the estimates) 2. b The estimated quantity, expressed in physical units or in percentages of reserves, of each mineral product that is recoverable in significant commercial quantities if the mineral reserves included under (a) include deposits containing one or more significant mineral products 3. c The quantities of each significant mineral produced during the year (if the mineral reserves included under (a) are ones that are milled or similarly processed, the quantity of each significant mineral product produced by the milling or similar process shall also be disclosed) 4. d The quantity of significant proved, or proved and probable, mineral reserves purchased or sold in place during the year 5. e For each significant mineral product, the average market price or, for mineral products transferred within the entity, the equivalent market price prior to use in a manufacturing process. ##### [255-10-50-18](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:18459cef26f0056e243519ed8f36ec9e617a4c5c18c31c585daa0f7b614b66f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining the quantities to be reported in conformity with the preceding paragraph: 1. a If the entity issues consolidated financial statements, 100 percent of the quantities attributable to the parent entity and 100 percent of the quantities attributable to its consolidated subsidiaries (whether or not wholly owned) shall be included. 2. b If the entity's financial statements include investments that are proportionately consolidated, the entity's quantities shall include its proportionate share of the investee's quantities. 3. c If the entity's financial statements include investments that are accounted for by the equity method, the investee's quantities shall not be included in the disclosures of the entity's quantities. However, the entity's (investor's) share of the investee's quantities of reserves shall be reported separately, if significant. #### Measurement ##### [255-10-50-19](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:1fdc6876c2d918148cc9316c784b0835a65e7c07e1c96aa1db4fa96e44b91b94 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on disclosure. For that reason the guidance that describes how to measure items provided in the disclosures is included in this Section rather than Sections 255-10-30 or 255-10-35. ##### [255-10-50-20](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:17cf23bf18b79bf62fed4ecaefd91a6f2d69067c6326c13b05c6735402cd4184 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current cost amounts of inventory and property, plant, and equipment are measured as follows: 1. a Inventory at current cost or lower recoverable amount at the measurement date 2. b Property, plant, and equipment at the current cost or lower recoverable amount of the assets' remaining service potential at the measurement date 3. c Resources used on a partly completed contract at current cost or lower recoverable amount at the date of use on or commitment to the contract. ##### [255-10-50-21](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:1c582206324718f970b5566852de5760eda5f3a40020d6f9f440062c10882fde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current cost of inventory owned by an entity is the current cost of purchasing the goods concerned or the current cost of the resources required to produce the goods concerned (including an allowance for the current overhead costs according to the allocation bases used under GAAP), whichever would be applicable in the circumstances of the entity. ##### [255-10-50-22](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:6c1530411ba2b829b62ba6e711d09b62874bedaa2ab4093e9744d2a4cc9118fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current cost of property, plant, and equipment owned by an entity is the current cost of acquiring the same service potential (indicated by operating costs and physical output capacity) as embodied by the asset owned; the information used to measure current cost reflects whatever method of acquisition would currently be appropriate in the circumstances of the entity. The current cost of a used asset may be calculated by measuring any of the following: 1. a The current cost of a new asset that has the same service potential as the used asset had when it was new (the current cost of the asset as if it were new) and deducting an allowance for depreciation 2. b The current cost of a used asset of the same age and in the same condition as the asset owned 3. c The current cost of a new asset with a different service potential and adjusting that cost for the value of the difference in service potential due to differences in life, output capacity, nature of service, and operating costs. ##### [255-10-50-23](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:4104cb556fc3f854ae06cfab9d8d6207a06839ea69fdd67da95e2b1bab6d9e1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following types of information are listed as examples of the information that may be used but are not listed in any order of preferability. The entity shall select types of information appropriate to its particular circumstances, giving due consideration to their availability, reliability, and cost: 1. a Indexation 1. 1 Externally generated price indexes for the class of goods or services being measured 2. 2 Internally generated price indexes for the class of goods or services being measured. 2. b Direct pricing 1. 1 Current invoice prices 2. 2 Vendors' price lists or other quotations or estimates 3. 3 Standard manufacturing costs that reflect current costs. ##### [255-10-50-24](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:819ffb8aef6420e91d303f2e68b2a99f52d1fc971ba43297156b6803ae4f47b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Various types of information may be used in the measurement methods described in paragraphs [255-10-50-21 through 50-22](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-21) to determine the current cost of inventory; property, plant, and equipment; cost of goods sold; and depreciation, depletion, and amortization expense. The information may be applied to single items or broad categories, as appropriate in the circumstances. ##### [255-10-50-25](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:642c66fc96f5865a7c21f0a9ef151460a698af8492f2a978b1a23e721b103ad4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If turnover is rapid and material amounts of depreciation are not allocated to inventory, cost of goods sold measured on a last-in, first-out (LIFO) basis may provide an acceptable approximation of cost of goods sold, measured at current cost, provided that the effect of any LIFO inventory liquidations (that is, any decreases in earlier years' LIFO layers) is excluded. ##### [255-10-50-26](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:9239efc8834ee26e67b6902d39d9670232d7464c85c13fd4fff7039cd75b6955 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may substitute [historical cost](https://asc.understandingaccounting.org/glossary/h/#historical-cost "The generally accepted method of accounting used in the primary financial statements that is based on measures of historical prices without restatement into units, each of which has the same general purchasing power.") amounts adjusted by an externally generated price index of a broad-based measure of general purchasing power (that is, [historical cost-constant purchasing power amounts](https://asc.understandingaccounting.org/glossary/h/#historical-cost-constant-purchasing-power-accounting "A method of accounting based on measures of historical prices in units of a currency, each of which has the same general purchasing power.")) for current cost amounts if that substitution would not result in a significantly different number for income from continuing operations than other means of estimating current cost amounts described in this Subtopic. For example, an entity with small amounts of inventory and property, plant, and equipment apart from certain specialized assets (see paragraphs [255-10-50-30 through 50-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-30) ) may be able to report historical cost-constant purchasing power information. In such circumstances, disclosure of the increase or decrease in the current cost or lower recoverable amount of inventory and property, plant, and equipment, net of inflation (see paragraphs [255-10-50-3(d)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-3) and [255-10-50-16(b)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-16)) is not required, but the disclosures described in paragraphs [255-10-50-10](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-10) and [255-10-50-16(a), 50-16(c), and 50-16(d)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-16) are required. ##### [255-10-50-27](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:f16a8fab17e77569b0b499528104a6df10d3cbb4ef69e43e2ba2b1c4ba600a7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current cost measurements shall be based on production or purchase of the asset in whatever location or market would minimize total cost including transportation cost. For a U.S. operation, either: 1. a The purchase would be made in the United States and current cost would be estimated directly in dollars. 2. b The purchase would be made in a foreign market and the current cost in that market would be translated into dollars at the current exchange rate. ##### [255-10-50-28](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:e231f015b189a196be4529b8c80d2cabd6a0f774bf1075e59ee1fd3bfa5027e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may need to measure the current cost of inventory and property, plant, and equipment located outside the United States. That may be difficult depending upon the availability of information in the country concerned, and, accordingly, reasonable approximations are acceptable. If a foreign operation first measures current cost in a currency other than its functional currency, that amount shall then be translated into the functional currency at the current exchange rate. ##### [255-10-50-29](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-29) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:5e9466f1b242cf2b1d6fa282576f519a5a191fb583dbb43a8b44f6c6ca3f7bc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There is a presumption that depreciation methods, estimates of useful lives, and salvage values of assets for purposes of the supplementary information are the same as the methods and estimates used for calculations in the primary financial statements. However, if the primary financial statements are based on methods and estimates that partly allow for price changes, different methods and estimates may be used for purposes of the supplementary information. ##### [255-10-50-30](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-30) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:160670ac94b549082f258984eb22f4aed119a783a4476eb36187f8ee8f1273d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current cost of [mineral resource assets](https://asc.understandingaccounting.org/glossary/m/#mineral-resource-assets "Assets that are directly associated with and derive value from all minerals that are extracted from the earth. Such minerals include oil and gas, ores containing ferrous and nonferrous metals, coal, shale, geothermal steam, sulphur, salt, stone, phosphate, sand, and gravel. Mineral resource assets include mineral interests in properties, completed and uncompleted wells, and related equipment and facilities and other facilities required for purposes of extraction. This definition does not cover support equipment because that equipment is included in the property, plant, and equipment for which current cost measurements are required.") shall be determined by current market buying prices or by the current cost of finding and developing mineral reserves. No generally accepted approach exists for measuring the current finding cost of mineral reserves. To indicate the effects of changes in current costs, it may be impracticable to do more than adjust historical costs by an index of the changes in specific prices of the inputs concerned. That approach may fail to yield a close approximation of the current cost of finding and developing new reserves. In recognition of that difficulty, the requirements of this Subtopic are flexible regarding the approach used to measure current cost of mineral resource assets. The approach may include use of specific price indexes, direct information about market buying prices, and other statistical evidence of the cost of acquisitions. ##### [255-10-50-31](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-31) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:b0de4fa6200b4ec00b146dfb5cd3a86b1d5271a86090be1717b9c9439c228fb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because paragraph [932-235-50-2](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-2) requires an entity to disclose a standardized measure of discounted future net cash flows relating to proved oil and gas reserve quantities, the entity may follow the approach in the preceding paragraph or in the following paragraph for its oil and gas mineral resource assets. Paragraph [255-10-50-16(c)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-16) requires disclosure of the types of information that have been used to measure current costs. ##### [255-10-50-32](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-32) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:0147404b06839cc1d161afd8976a8b3ef7767e57b538e34d581465f992cfa1da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Timberlands and growing timber, [income-producing real estate](https://asc.understandingaccounting.org/glossary/i/#income-producing-real-estate "Properties that meet all of the following criteria: Cash flows can be directly associated with a long-term leasing agreement with unaffiliated parties. The property is being operated. (It is not in a construction phase.) Future cash flows from the property are reasonably estimable. Ancillary services are not a significant part of the lease agreement. Hotels, which have occupancy rates and related cash flows that may fluctuate to a relatively large extent, do not meet the criteria for income-producing real estate."), and [motion picture films](https://asc.understandingaccounting.org/glossary/m/#motion-picture-films "All types of film, including feature films, television specials, television series, or similar products (including animated films and television programming) that are sold, licensed, or exhibited, whether produced on film, video tape, digital, or other video recording format.") have certain special features that raise doubts about the applicability of the current cost measurement methods required for other assets. Accordingly, an entity may disclose historical cost amounts adjusted by an externally generated index of a broad-based measure of general purchasing power as substitutes for current cost amounts for such assets and their related expenses. ##### [255-10-50-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-33) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:b3a9752f0bf23d7dc07b5dba474b7ffdaabfe8612d4c7c7c4a8d5f4039024f1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity estimates the current cost of growing timber and timber harvested by adjusting historical cost for the changes in specific prices, those historical costs may either: 1. a Be limited to the costs that are capitalized in the primary financial statements 2. b Include all costs that are directly related to reforestation and forest management, such as planting, fertilization, fire protection, property taxes, and nursery stock, whether or not those costs are capitalized in the primary financial statements. ##### [255-10-50-34](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-34) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:b13ab6adc4dae71c5471871604032c6e0fba5402678d99c2df02e3e9a186beff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the entity presents the minimum information required by this Subtopic, the amount of net assets (that is, shareholders' equity) is the amount of net assets reported in the primary financial statements, adjusted for the difference between the historical cost amounts and the current cost or lower recoverable amounts of inventory and property, plant, and equipment. ##### [255-10-50-35](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-35) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:bb0080a816b79f502efc4977247245b774594d1cb978dcfc0e69e1bfe63f3c0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the entity elects to present comprehensive current cost-constant purchasing power financial statements as supplementary information, the amount of net assets in the five-year summary is the amount reported in the supplementary balance sheet. ##### [255-10-50-36](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-36) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:900a4aa8b66da28c5fb0e0608506a8b5efe7d9323a66ca75a30c288bc49aa076 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Recoverable amount may be measured by considering the [value in use](https://asc.understandingaccounting.org/glossary/v/#value-in-use "The amount determined by discounting the future cash flows (including the ultimate proceeds of disposal) expected to be derived from the use of an asset at an appropriate rate that allows for the risk of the activities concerned.") or [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") less costs to sell of the asset concerned. Value in use is used to determine recoverable amount of an asset if immediate sale of the asset is not intended. Fair value less costs to sell is used to determine [recoverable amount](https://asc.understandingaccounting.org/glossary/r/#recoverable-amount "Current worth of the net amount of cash expected to be recoverable from the use or sale of an asset.") only if the asset is about to be sold. ##### [255-10-50-37](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-37) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:47859799b4b7e7da3a0c2805ed6e74acc87868619304b177f3fbf75a4c65fdab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the recoverable amount for a group of assets is judged to be materially and permanently lower than the current cost amount, the recoverable amount shall be used as a measure of the assets and of the expense associated with the use or sale of the assets. Decisions on the measurement of assets at their recoverable amounts need not be made by considering assets individually unless they are used independently of other assets. ##### [255-10-50-38](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-38) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:49704ffbcd4956f631719e8e220c59384c6618b1b94371870313741af8e3a0e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that is subject to rate regulation or another form of price control may be limited to a maximum recovery through its selling prices, based on the nominal currency amount of the historical cost of its assets. In that situation, historical costs measured in nominal currency may represent an appropriate basis for the measurement of the recoverable amounts associated with those assets. Recoverable amounts may also be lower than historical costs. Nevertheless, cost of goods sold and depreciation, depletion, and amortization expense shall be measured at current cost-constant purchasing power amounts provided that replacement of the service potential of the related assets would be undertaken, if necessary, in current economic conditions; if replacement would not be undertaken, those expenses shall be measured at recoverable amounts. ##### [255-10-50-39](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-39) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:1925393995827f1cc65c2590ca4eb7291077e22f8fee4258c7686a2ae162792d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that presents the minimum information required by this Subtopic shall measure income from continuing operations on a current cost basis as follows: 1. a Cost of goods sold at current cost or lower recoverable amount at the date of sale or at the date on which resources are used on or committed to a specific contract 2. b Depreciation, depletion, and amortization expense of property, plant, and equipment on the basis of the average current cost of the assets' service potential or lower recoverable amount during the period of use. ##### [255-10-50-40](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-40) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:5ed7d29410b92cbe438fa4e8f38e195f6235f5b38bd5e7b4603e20370929c3f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other revenues, expenses, gains, and losses may be measured at the amounts included in the primary income statement. (See paragraphs [255-10-50-20 through 50-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-20) and [255-10-50-36 through 50-38](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-36) for discussions of current cost or lower recoverable amount measurements.) ##### [255-10-50-41](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-41) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:532b5e1120b14cb0ae88af43f56525a178c02e536f7dd498c45cb209a38a739e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of income tax expense in computations of current cost-constant purchasing power income from continuing operations is the same as the amount of income tax expense charged against income from continuing operations in the primary financial statements. No adjustments shall be made to income tax expense for any temporary differences that might be deemed to arise as a result of the use of current cost accounting methods. Income tax expense shall not be allocated between [income from continuing operations](https://asc.understandingaccounting.org/glossary/i/#income-from-continuing-operations "Income after applicable income taxes but excluding the results of discontinued operations, the cumulative effect of accounting changes, translation adjustments, purchasing power gains and losses on monetary items, and increases and decreases in the current cost or lower recoverable amount of nonmonetary assets and liabilities.") and the increases or decreases in current cost amounts of inventory and property, plant, and equipment. ##### [255-10-50-42](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-42) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:7fd39376189ad294f89c18a81554cbd08dc0086f5d71988b808a4b3f272cddc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increase or decrease in the current cost amounts of inventory and property, plant, and equipment represents the difference between the measures of the assets at their entry dates for the year and the measures of the assets at their exit dates for the year. Entry dates means the beginning of the year or the dates of acquisition, whichever is applicable; exit dates means the end of the year or the dates of use, sale, or commitment to a specific contract, whichever is applicable. For the purposes of this paragraph, assets shall be measured in accordance with the provisions of paragraphs [255-10-50-20 through 50-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-20) and paragraphs [255-10-50-36 through 50-38](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-36) . ##### [255-10-50-43](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-43) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:ddf8d0f4ccff76022e24c47aca8747b63356f11ad7ea1011f83d656844339531 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the current year, the increase or decrease in current cost amounts of inventory and property, plant, and equipment shall be reported both before and after eliminating the effects of general inflation (see paragraph [255-10-50-16(b)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-16)). In the five-year summary, the increase or decrease shall be reported after elimination of the effects of each year's general inflation (see paragraph [255-10-50-3(d)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-3)). An acceptable approximate method of calculating the increase or decrease in current cost amounts and the inflation adjustment is illustrated in Example 1 (see paragraphs [255-10-55-46 through 55-49](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-46) ). ##### [255-10-50-44](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-44) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:a28e32a630f0e1e3fae82fdc19cc7bd0f8414e9105a1af1106c52dfc6f8c8e6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities that do not have significant foreign operations or that use the dollar as the functional currency for all significant foreign operations shall use the Consumer Price Index for All Urban Consumers to restate current costs into units of constant purchasing power. Acceptable approximate methods are illustrated in Example 1 (see paragraphs [255-10-55-66 through 55-67](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-66) ). ##### [255-10-50-45](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-45) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:69f092ee9d800110cf6a240b2f6b561cef113ee5cb22218971c42abfc4047dea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effects of general inflation on current cost information for operations measured in a foreign functional currency shall be measured either: 1. a After translation and based upon the Consumer Price Index for All Urban Consumers (the translate-restate method) 2. b Before translation and based on a broad-based measure of the change in the general purchasing power of the functional currency (the restate-translate method). ##### [255-10-50-46](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-46) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:ee5ea85affcd7903a26676389bc493398b184679b0e1761b37fbd36dd6deaf32 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The same method shall be used for all operations measured in functional currencies other than the dollar and for all periods presented. Acceptable approximate methods are illustrated in Example 1 (see paragraphs [255-10-55-66 through 55-70](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-66) and [255-10-55-78 through 55-80](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-78) ). ##### [255-10-50-47](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-47) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:f165d8c5c669631e203d31a2e47f7c9d7bca22b1beb2d987057a11261c7d1591 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The choice of a measure of functional currency purchasing power should take into account the availability, reliability, and timeliness of a general price level index and the frequency with which it is adjusted. It is anticipated that an appropriate index of the change in the general price level will be available for most functional currencies. Indexes are published in most countries, and some indexes are published periodically by organizations such as the International Monetary Fund, the Organisation for Economic Co-Operation and Development, and the United Nations. However, in some cases indexes may not be available on a timely basis or may not be sufficiently reliable. In those circumstances, management should estimate the change in the general price level. ##### [255-10-50-48](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-48) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:2327e270116d8894c13cd95fc2c0ef7a88b3ebd04f996144d462b739f05c17a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If current cost information for operations measured in functional currencies other than the dollar is based on the translate-restate method, the aggregate translation adjustment on the current cost basis shall be stated net of any income taxes allocated to the aggregate translation adjustment in the primary financial statements (see paragraph [830-30-45-20(c)](https://asc.understandingaccounting.org/asc/830/30/#830-30-45-20)). ##### [255-10-50-49](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-49) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:29f187b1cf0f0a6e878b00ac3d8f9d6092e17c5526e2a68c7158946dfa977fc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If current cost information for operations measured in functional currencies other than the dollar is based on the restate-translate method, the aggregate translation adjustment on the current cost basis shall be stated net of both any income taxes allocated to the aggregate translation adjustment in the primary financial statements and the aggregate [parity adjustment](https://asc.understandingaccounting.org/glossary/p/#parity-adjustment "The effect of the difference between local and U.S. inflation for the year on net assets (that is, shareholders' equity) measured in nominal dollars. If only the differential rates of U.S. and local inflation are reflected in the exchange rates (parity), the parity adjustment and the translation adjustment net to zero. Therefore, the sum of the parity adjustment and the translation adjustment represents the effect of exchange rate changes in excess of (or less than) that needed to maintain purchasing power parity between the functional currency and the dollar."). The parity adjustment is the amount needed to measure end-of-year net assets in either of the following: 1. a Average-for-the-year dollars, if income from continuing operations is measured in average-for-the-year functional currency units 2. b End-of-year dollars, if income from continuing operations is measured in end-of-year functional currency units. ##### [255-10-50-50](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-50) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:8834030d6e6fe6da61695320c6934436085f24b8c261d8a8bc472fd98a956a68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purchasing power gain or loss on net monetary items is the net gain or loss determined by restating in units of constant purchasing power the opening and closing balances of, and transactions in, [monetary assets](https://asc.understandingaccounting.org/glossary/m/#monetary-assets "Money or a claim to receive a sum of money the amount of which is fixed or determinable without reference to future prices of specific goods or services.") and [monetary liabilities](https://asc.understandingaccounting.org/glossary/m/#monetary-liability "An obligation to pay a sum of money the amount of which is fixed or determinable without reference to future prices of specific goods and services."). Acceptable approximate methods of calculating the purchasing power gain or loss on net monetary items are illustrated in Example 1 (see paragraphs [255-10-55-45](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-45), [255-10-55-68 through 55-70](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-68) , and [255-10-55-78](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-78)). ##### [255-10-50-51](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-51) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:c0d16af6749b1967a58a375eece0bdaa17c393459b8d393329211db281981f5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The economic significance of monetary assets and liabilities depends heavily on the general purchasing power of money, although other factors, such as creditworthiness of debtors, may affect their significance. The economic significance of nonmonetary items depends heavily on the value of specific goods and services. Nonmonetary assets include all of the following: 1. a Goods held primarily for resale or assets held primarily for direct use in providing services for the business of the entity 2. b Claims to cash in amounts dependent on future prices of specific goods or services 3. c Residual rights such as goodwill or equity interests. ##### [255-10-50-52](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-52) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:5544aca549d0bf9cf9ba286058546551e25b5ae78c4aa97e4dd718487bac58f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Nonmonetary liabilities include both of the following: 1. a Obligations to furnish goods or services in quantities that are fixed or determinable without reference to changes in prices 2. b Obligations to pay cash in amounts dependent on future prices of specific goods or services. ##### [255-10-50-53](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-53) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:d468f27bf0f02337b7cdde570ce6bb7d8673e2d0f5d43fe2fa871a930921c1ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance on the classification of balance sheet items as monetary or nonmonetary is set forth in paragraphs [255-10-55-1 through 55-13](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-1) . ##### [255-10-50-54](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-54) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:7d9ce302255c5882745001ee75b582139a66d4ff78edbb3ee991fd33728946ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If inflation-adjusted current cost information is based on the translate-restate method, the purchasing power gain or loss on net monetary items is equal to the net gain or loss determined by restating the opening and closing balances of, and transactions in, monetary assets and liabilities in units of constant purchasing power as measured by the Consumer Price Index for All Urban Consumers. ##### [255-10-50-55](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-55) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:23.879Z to 2026-09-09T23:18:23.879Z Record version: sha256:f0c24d3cd5bb189e4611801cadef98a8f2a29f860c42ff8a949cc23e52d90918 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If inflation-adjusted current cost information is based on the restate-translate method, the purchasing power gain or loss on net monetary items is equal to the net gain or loss determined by restating the opening and closing balances of, and transactions in, monetary assets and liabilities in units of constant purchasing power as measured by the change in the general purchasing power of the functional currency. The [purchasing power gain or loss](https://asc.understandingaccounting.org/glossary/p/#purchasing-power-gain-or-loss "The net gain or loss determined by restating in units of constant purchasing power the opening and closing balances of, and transactions in, monetary assets and liabilities.") computed in that manner shall be translated into its dollar equivalent at the average exchange rate for the period. Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:9ec5deeb4436f0b6cc93853ec4c6c690903dfffe411a34960b21b2808d94bf97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/255/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [255-10-55-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:64e76e6b7c76a04a6250a21bc1397a724e61fe3b37fcdd812d0ae1334fd418b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs 255-10-55-1 through 55-13 of this Section provide guidance on the interpretation of paragraphs [255-10-50-50 through 50-55](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-50) for the classification of certain asset and liability items as monetary or nonmonetary. The following table illustrates the application of the definitions to common cases under typical circumstances. In other circumstances the classification should be resolved by reference to the definitions. Paragraphs 255-10-55-1 through 55-13 are not intended to provide answers that should be followed regardless of the circumstances of the case. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-4D03BAA7-1780-46FA-8422-730001ADC14B-low.gif) Assets Monetary Nonmonetary Cash on hand and demand bank deposits (dollars) X Time deposits (dollars) X Foreign currency on hand and claims to foreign currency (a) X Securities: Common stocks (not accounted for on the equity method) X Common stocks represent residual interests in the underlying net assets and earnings of the issuer. Preferred stock (convertible or participating) Circumstances may indicate that such stock is either monetary or nonmonetary. See convertible bonds. "Preferred stock (nonconvertible, nonparticipating)" X Future cash receipts are likely to be substantially unaffected by changes in specific prices. Convertible bonds "If the market values the security primarily as a bond, it is monetary; if it values the security primarily as stock, it is nonmonetary." Bonds (other than convertibles) X "Trading account investments in fixed-income securities owned by banks, investment brokers, and others (see paragraphs 255-10-55-2 through 55-3)" X Accounts and notes receivable X Allowance for doubtful accounts and notes receivable X Variable-rate mortgage loans X "The terms of such loans do not link them directly to the rate of inflation. Also, there are practical reasons for classifying all loans as monetary." Inventories used on contracts "They are, in substance, right to receive sums of money if the future cash receipts on the contracts will not vary due to future changes in specific prices. Goods used on contracts to be priced at market upon delivery are nonmonetary." Inventories (other than inventories used on contracts) and commodity inventories (other than those described below) X Commodity inventories whose values are hedged by futures contracts whose contract amounts have not been recorded in the financial statements See paragraphs 255-10-55-4 through 55-5. Loans to employees X "Prepaid insurance, advertising, rent, and other prepayments" "Claims to future services are nonmonetary. Prepayments that are deposits, advance payments, or receivables are monetary because the prepayment does not obtain a given quantity of future services, but rather is a fixed-money offset." Long-term receivables X Refundable deposits X Advances to unconsolidated subsidiaries X Equity investment in unconsolidated subsidiaries or other investees X "Pension, sinking, and other funds under an entity's control" The specific assets in the fund should be classified as monetary or nonmonetary. See listings under securities. "Property, plant, and equipment" X "Accumulated depreciation of property, plant, and equipment" X "The unguaranteed residual value of property owned by a lessor and leased under direct financing, sales-type, and leveraged leases" See paragraphs 255-10-55-6 through 55-7. "Investment tax credits that are deferred by a lessor as part of the unearned income of a leveraged lease" See paragraphs 255-10-55-8 through 55-9. Portion of the carrying amount of lessors' assets leased under noncancellable operating leases that represent claims to fixed sums of money (see paragraphs .255-10-55-10 through 55-11) X Cash surrender value of life insurance X Purchase commitments—portion paid on fixed-price contracts X An advance on a fixed-price contract is the portion of the purchaser's claim to nonmonetary goods or services that is recognized in the accounts; it is not a right to receive money. Advances to supplier—not on a fixed-price contract "Such advances are rights to receive credit for a sum of money, not claims to a specified quantity of goods or services." X Deferred tax assets (a) X "Patents, trademarks, licenses, and formulas" X Goodwill X Deferred life insurance policy acquisition costs (a) X Such costs represent the portion of future cash receipts for premiums that is recognized in the accounts and are sometimes viewed as an offset to the policy reserve. Deferred property and casualty insurance policy acquisition costs related to unearned premiums X Other intangible assets and deferred charges X - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-77B0B17D-F5E5-47FF-B38B-1F51F35BD568-low.gif) Liabilities Monetary Nonmonetary Accounts and notes payable X Accrued expenses payable (wages and so forth) X Accrued vacation pay "If to be paid at the wage rates as of the vacation dates and if those rates may vary, accrued vacation pay is nonmonetary." Cash dividends payable X Obligations payable in foreign currency X Sales commitments—portion collected on fixed-price contracts X An advance received on a fixed-price contract is the portion of the seller's obligation to deliver goods or services that is recognized in the accounts; it is not an obligation to pay money. Advances from customers—not on a fixed-price contract X Such advances are equivalent to loans from customers and are not obligations to furnish specified quantities of goods or services. Accrued losses on firm purchase commitments X "In essence, these are accounts payable." Deferred revenue "If an obligation to furnish goods or services is involved, deferred revenue is nonmonetary. Certain deferred income items of savings and loan associations are monetary." Refundable deposits X Bonds payable and other long-term debt X Unamortized premium or discount and prepaid interest on bonds or notes payable X Such items are inseparable from the debt to which they relate—a monetary item. Convertible bonds payable X "Until converted, these are obligations to pay sums of money." Accrued pension obligations Fixed amounts payable to a fund are monetary; all other amounts are nonmonetary. Obligations under warranties X These are nonmonetary because they oblige the entity to furnish goods or services or their future price. Deferred tax liabilities (a) X Deferred investment tax credits X These are not to be settled by payment of cash and are related to nonmonetary assets. Life insurance policy reserves X These represent portions of policies' face values that are now deemed liabilities. Property and casualty insurance loss reserves X Unearned property and casualty insurance premiums X These are nonmonetary because they are principally obligations to furnish insurance coverage. The dollar amount of payments to be made under that coverage might vary materially due to changes in specific prices. Deposit liabilities of financial institutions X Equity Monetary Nonmonetary Capital stock of the entity or of its consolidated subsidiaries subject to mandatory redemption at fixed amounts (see paragraph 255-10-55-13) X Noncontrolling interests in consolidation subsidiaries (see paragraph 255-10-55-12) X (a) "Although classification of this item as nonmonetary may be technically preferable, the monetary classification provides a more practical solution for the purposes of computing the purchasing power gain or loss on a consolidated basis." ##### [255-10-55-2](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:6d7ccca58c4cf0cca57df3aab1e17950aae2238b1acc79b95b97fd3762ad30bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Trading account securities are securities of all types carried in a trading account that are held principally for resale. These securities generally are carried at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). Trading account investments include both fixed-income securities (for example, nonconvertible preferred stock, convertible bonds, and other bonds) and other securities (for example, common stock). Usually, trading account securities are held for extremely short periods of time—sometimes for only a few hours. Frequently, the entity buys and sells the securities expecting to make a profit on the difference between dealer and retail, or bid and ask, prices rather than on price changes during the period securities are held. However, the prices of the securities change with market forces. ##### [255-10-55-3](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:7f630c0329b190db15f5e70644298aba26f53ee6b12561f2137750ecd6b2b0ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Trading account investments in fixed-income securities are not claims to receive sums of money that are fixed or determinable. The market prices of the securities might and frequently do change while the securities are held. Generally, nonconvertible and nonparticipating preferred stock, convertible bonds that the market values primarily as bonds rather than as stocks, and nonconvertible bonds should be classified as monetary items. However, those classifications are based, in part, on the assumption that those securities would be held for long periods, if not to maturity. Trading account investments, on the other hand, are held for shorter periods and their value depends much less heavily on the general purchasing power of money and more on the specific values of the securities. Therefore, trading account investments in fixed-income securities should be classified as nonmonetary. ##### [255-10-55-4](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:ce2827abefa12ca2594e3724c8ef3af41f9aaf2c28817280a2bbd83e3e5a24af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many entities hedge commodity inventories (such as grain or metals). Short hedges are designed to provide a degree of assurance that a decline in the price of the commodity would be offset by an increase in the value of the hedge contract. Short hedges thus tend to reduce the effects of price changes on the inventory that is hedged. ##### [255-10-55-5](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:84de965904172d16c833380af412c363563ccc8e202fd96ad6a70bfa275e4c70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are certain similarities between inventories that are hedged and inventories that are used on or committed to a fixed-price contract. In each case, the risk of gain or loss due to price changes before the inventory is sold is largely or entirely eliminated. To the extent that hedges fix the value of an inventory in dollars (or units of foreign functional currency, if appropriate), the inventory effectively becomes a monetary item. ##### [255-10-55-6](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:7d6db03a8041701b8da3e3b794c17d3dc15972a6e8cbd3393306c88bcc370aee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [unguaranteed residual value](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-value "The estimated residual value of the leased property exclusive of any portion guaranteed by the lessee or by a third party unrelated to the lessor. A guarantee by a third party related to the lessee shall be considered a lessee guarantee. If the guarantor is related to the lessor, the residual value shall be considered as unguaranteed.") is included with the minimum lease payments, at present value, in the net investment in the lease. ##### [255-10-55-7](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:008f6dd5f32ebabc204c74edb58f3ba2cbd69cf70fe50a8a2016f357505978da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The minimum lease payments are monetary items because they are claims to fixed sums of money. The residual value is not a claim to a fixed sum of money, so it is a nonmonetary item. Some assets and liabilities, of which the net investment in the lease is a good example, are combinations of claims to (or obligations of) fixed amounts and claims to (or obligations of) variable amounts. Ideally, those claims should be separated for purposes of classifying them as monetary and nonmonetary. However, if the information necessary to make the separation is not available or is impracticable to obtain, such items need not be divided into monetary and nonmonetary components and would be classified according to their dominant element. If the net investment in leases is principally claims to fixed amounts, it would be classified as monetary; it would be classified as nonmonetary if it is principally claims to residuals. ##### [255-10-55-7A](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-7A) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:7b15b9632a361d5da37aacbec0e33ae71d3cece99ba66d21cbfb64e7edc40dd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") arising from a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") is a monetary item because it is a claim to a fixed sum of money. The [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") arising from a sales-type lease or a direct financing lease is not a claim to a fixed sum of money, so it is a nonmonetary item. Some assets and liabilities, of which the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") is a good example, are combinations of claims to (or obligations of) fixed amounts and claims to (or obligations of) variable amounts. Because the net investment in a sales-type or direct financing lease is predominantly a claim to a fixed sum of money, it should be classified as monetary. In accordance with Subtopic 842-30, a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") includes the unguaranteed residual asset as part of its net investment in the lease. Consequently, the unguaranteed residual asset is accounted for in the same manner as a monetary item so long as it is part of the net investment in the lease. If the lessor sells the lease receivable but retains an interest in the unguaranteed residual asset, the remaining unguaranteed residual asset is accounted for as a nonmonetary item after the sale of the lease receivable. ##### [255-10-55-8](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:e782b572fa579221724c848cc544326cfa2a380fe1d66c3644a1865db63c42af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under paragraph [842-50-35-2](https://asc.understandingaccounting.org/asc/842/50/#842-50-35-2), the deferred investment tax credit related to the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") is subtracted from rentals receivable and estimated residual value as part of the calculation of the lessor's investment in the [leveraged lease](https://asc.understandingaccounting.org/glossary/l/#leveraged-lease "From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date."). The lessor's investment in a leveraged lease, including the deferred investment tax credit related to the leveraged lease, is presented as one amount in the balance sheet. As indicated in paragraph [255-10-55-7](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-7), the investment in a leveraged lease would be classified as monetary or nonmonetary according to its dominant element. ##### [255-10-55-9](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:dacf0af12c0fea744441a7eff5fc6488a42ea9b3d76c460d3719fb2eae0febb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in the table in paragraph [255-10-55-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-1), a deferred investment tax credit should be classified as nonmonetary but, if it is part of an investment in a leveraged lease and if the information necessary to separate its elements is not available or is impracticable to obtain, the investment would be classified according to its dominant element. ##### [255-10-55-10](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:2ab307995ac14751f641c0c291a77e905581b2581c0c31aa799376a5d690211f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. These assets are carried at depreciated [historical cost](https://asc.understandingaccounting.org/glossary/h/#historical-cost "The generally accepted method of accounting used in the primary financial statements that is based on measures of historical prices without restatement into units, each of which has the same general purchasing power.") under generally accepted accounting principles (GAAP) and are classified with or near property, plant, and equipment, which are nonmonetary. ##### [255-10-55-11](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:a5109ab99cff57fc63c60fcdd894fc302b00df81cb733e6f4a1b298e4d2facec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The classification of a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") as an operating lease under paragraphs [842-10-25-2 through 25-3](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-2) indicates that the lessee has not obtained control of the nonmonetary [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") as a result of the lease. Thus, the economic significance of the asset continues to depend heavily on the value of the future lease rentals, residual values, and associated costs that do not represent fixed sums of money. Therefore, an asset subject to an operating lease should be classified as nonmonetary. ##### [255-10-55-12](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:045bb62116d24cedca3f669d1c88878d1e475a47ca5eaf5169102b1a42e577b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The interests of noncontrolling shareholders in the earnings and equity of subsidiaries are, from the consolidated entity's point of view, claims that are not fixed. Rather, they are residuals that will vary based on the subsidiary's earnings, dividends, and other transactions affecting its equity and so are nonmonetary. (See the following paragraph as to classification of capital stock of the entity or of its consolidated subsidiaries subject to mandatory redemption at fixed amounts.) ##### [255-10-55-13](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:1d53cd72b1df67a0362a2415f443003cb89d689d39ee1172a9020dfae092a409 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Such securities are claims of the stockholders to a fixed sum of money and therefore are monetary. Classification as a monetary item called for in paragraphs [255-10-55-1 through 55-13](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-1) is only for purposes of determining a [purchasing power gain or loss](https://asc.understandingaccounting.org/glossary/p/#purchasing-power-gain-or-loss "The net gain or loss determined by restating in units of constant purchasing power the opening and closing balances of, and transactions in, monetary assets and liabilities."). Those paragraphs do not address how such securities should be classified in balance sheets or the accounting for dividends on those securities. #### Illustrations ##### [255-10-55-14](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:56cc8fa1b75ea8bfde5919e69aae3bf078d448237e8b6b61043df852763948e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates formats that may be used to disclose the information required by this Subtopic for a manufacturing entity. An entity may choose to disclose the information required by paragraphs [255-10-50-3 through 50-16](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-3) in any of the following ways: 1. a In a schedule of annual information (for example, Schedule 1 or Schedule 2), with notes to those schedules 2. b In a five-year summary (for example, Schedule 3 or Schedule 4) 3. c In a five-year summary with notes to that summary (for example, Schedule 5). ##### [255-10-55-15](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:96c718a0d8aca27f676bf1f064fdae42c1ce0c236cda3304ff46e00ffd87916b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many entities include amounts reported in the primary statements alongside [current cost-constant purchasing power](https://asc.understandingaccounting.org/glossary/c/#current-cost-constant-purchasing-power-accounting "A method of accounting based on measures of current cost or lower recoverable amount in units of currency, each of which has the same general purchasing power. For operations in which the dollar is the functional currency, the general purchasing power of the dollar is used and the Consumer Price Index for All Urban Consumers is the required measure of purchasing power. For operations in which the functional currency is other than the dollar, the general purchasing power of either the dollar or the functional currency is used (see paragraphs 255-10-50-45255-10-50-46255-10-50-47).") amounts in the five-year summary. ##### [255-10-55-16](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:935794879b13760cbb28ddfcf26c1718299924aa296e918fb3243858f4c5ae31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities are encouraged to provide more detailed discussions than the illustrative notes in this Example—especially discussion of the significance of the information as it relates to the circumstances of the entity (required by paragraph [255-10-50-10](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-10)) and the principal types of information used to calculate current cost amounts (required by paragraph [255-10-50-16(c)](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-16)). Illustrative calculations are given in paragraphs [255-10-55-22 through 55-89](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-22) . In the schedules that follow, the [Consumer Price Index for All Urban Consumers](https://asc.understandingaccounting.org/glossary/c/#consumer-price-index-for-all-urban-consumers "An index of price level changes affecting consumers generally, often used to measure changes in the general purchasing power of the monetary unit itself.") is expressed in average U.S. dollars. ##### [255-10-55-17](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:9cef5b669e7f2422036efc14f7cd50708538c3402dd8a7ea40119efd0909186d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates one format for the statement of [income from continuing operations](https://asc.understandingaccounting.org/glossary/i/#income-from-continuing-operations "Income after applicable income taxes but excluding the results of discontinued operations, the cumulative effect of accounting changes, translation adjustments, purchasing power gains and losses on monetary items, and increases and decreases in the current cost or lower recoverable amount of nonmonetary assets and liabilities.") in a schedule of annual information. - ![](https://asc.understandingaccounting.org/asc-img/GUID-0B5184A6-4A8F-4772-8FDE-0B4BCAD723DE-low.gif) Schedule 1 STATEMENT OF INCOME FROM CONTINUING OPERATIONS ADJUSTED FOR CHANGING PRICES (a) "For the Year Ended December 31, 19X6 " In Thousands of Average 19X6 Dollars "Income from continuing operations, as reported in the primary income statement" " $22,995 " Adjustments to reflect current costs Cost of goods sold " (8,408)" Depreciation expense " (9,748)" Income from continuing operations adjusted for changes in specific prices " $4,839 " Gain from decline in purchasing power of net amounts owed (b) " $2,449 " "Increase in specific prices (current cost) of inventory and property, plant, and equipment held during the year (c)" " $25,846 " Effect of increase in general price level " 5,388 " Excess of increase in specific prices over increase in the general price level " $20,458 " Foreign currency translation adjustment (d) $(624) (a) "The condensed financial information in this schedule compares selected information from the primary financial statements with information that reflects effects of changes in the specific prices (current cost) of inventory and property, plant, and equipment expressed in units of constant purchasing power. The current cost amounts for inventory and cost of goods sold reflect actual manufacturing costs incurred in 19X6. The current cost amounts for major components of property, plant, and equipment were determined by applying specific price indexes to the applicable historical costs. For assets used in U.S. operations, Producer Price Indexes and Factory Mutual Building Indexes were used; for assets used in foreign operations, appropriate indexes for each country were used. The current cost information is expressed in average 19X6 dollars as measured by the Consumer Price Index for All Urban Consumers." (b) The purchasing power gain on net amounts owed is an economic benefit to the entity that results from being able to repay those amounts with cheaper dollars. (c) "During 19X6, the specific prices (current cost) of inventory increased by $9,108 and of property, plant, and equipment by $16,738. The total increase of $25,846 exceeded the increase necessary to keep pace with general inflation. At December 31, 19X6, the current cost of inventory was $65,700 and of property, plant, and equipment, net of accumulated depreciation, was $89,335 (both measured in December 31, 19X6 units of purchasing power). Those amounts are higher than the amounts in the primary statements of $63,000 for inventory and $45,750 for property, plant, and equipment, net of accumulated depreciation; therefore, it is reasonable to expect income from continuing operations on a current cost basis for 19X7 to remain significantly below that reported in the primary statements." (d) "Current cost amounts for foreign operations are measured in their functional currencies, translated into dollar equivalents using the average exchange rate for the year, and restated into constant units of purchasing power using the Consumer Price Index for All Urban Consumers. Essentially, the foreign currency translation adjustment is the effect of changes in exchange rates during the year on shareholders' equity. The negative translation adjustment indicates that, overall, the dollar has increased in value relative to the functional currencies used to measure the foreign operations of the entity." ##### [255-10-55-18](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:609ffa9b9aa03d2a273988aa19bb2b3688a1f7c8c02b7d461c7488f64a883cdc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates one format for the statement of income from continuing operations in a statement of annual information. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C74DB59F-8E70-47BA-8AAD-3DDFAF110102-low.gif) Schedule 2 STATEMENT OF INCOME FROM CONTINUING OPERATIONS ADJUSTED FOR CHANGING PRICES (a) "For the Year Ended December 31, 19X6 " In Thousands of Dollars As Reported in the Primary Statements Adjusted for Changes in Specific Prices (Current Cost) Net sales and other operating revenues " $275,500 " " $275,500 " Cost of goods sold " 197,000 " " 205,408 " Depreciation expense " 10,275 " " 20,023 " Other operating expenses " 14,685 " " 14,685 " Interest expense " 7,550 " " 7,550 " Income tax expense " 22,995 " " 22,995 " " 252,505 " " 270,661 " Income from continuing operations " $22,995 " " $4,839 " Gain from decline in purchasing power of net amounts owed (b) " $2,449 " "Increase in specific prices (current cost) of inventory and property, plant, and equipment held during the year (c)" " $25,846 " Effect of increase in general price level " 5,388 " Excess of increase in specific prices over increase in the general price level " $20,458 " Foreign currency translation adjustment (d) $(295) $(624) (a) "The condensed financial information in this schedule compares selected information from the primary financial statements with information that reflects effects of changes in the specific prices (current cost) of inventory and property, plant, and equipment expressed in units of constant purchasing power. The current cost amounts for inventory and cost of goods sold reflect actual manufacturing costs incurred in 19X6. The current cost amounts for major components of property, plant, and equipment were determined by applying specific price indexes to the applicable historical costs. For assets used in U.S. operations, Producer Price Indexes and Factory Mutual Building Indexes were used; for assets used in foreign operations, appropriate indexes for each country were used. The current cost information is expressed in average 19X6 dollars as measured by the Consumer Price Index for All Urban Consumers." (b) The purchasing power gain on net amounts owed is an economic benefit to the entity that results from being able to repay those amounts with cheaper dollars. (c) "During 19X6, the specific prices (current cost) of inventory increased by $9,108 and of property, plant, and equipment by $16,738. The total increase of $25,846 exceeded the increase necessary to keep pace with general inflation. At December 31, 19X6, the current cost of inventory was $65,700 and of property, plant, and equipment, net of accumulated depreciation, was $89,335 (both measured in December 31, 19X6 units of purchasing power). Those amounts are higher than the amounts in the primary statements of $63,000 for inventory and $45,750 for property, plant, and equipment, net of accumulated depreciation; therefore, it is reasonable to expect income from continuing operations on a current cost basis for 19X7 to remain significantly below that reported in the primary statements." (d) "Current cost amounts for foreign operations are measured in their functional currencies, translated into dollar equivalents using the average exchange rate for the year, and restated into constant units of purchasing power using the Consumer Price Index for All Urban Consumers. Essentially, the foreign currency translation adjustment is the effect of changes in exchange rates during the year on shareholders' equity. The negative translation adjustment indicates that, overall, the dollar has increased in value relative to the functional currencies used to measure the foreign operations of the entity." ##### [255-10-55-19](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:48c58aefef775d57e5de813b944585b0fbd627ffe786abe09396af4d663857a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates one format for the five-year comparison of selected financial data. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E1FE12D7-BBF1-49D8-B824-B0A39EB0437A-low.gif) Schedule 3 FIVE-YEAR COMPARISON OF SELECTED FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES(a) "In Thousands of Average 19X6 Dollars, except for Per Share Amounts" "Year Ended December 31," 19X6 19X5 19X4 19X3 19X2 Net sales and other operating revenues " $275,500 " " $247,500 " " $240,000 " " $235,500 " " $265,000 " Income (loss) from continuing operations " 4,839 " " 1,660 " " (2,102)" " (4,663)" " 1,261 " Gain from decline in purchasing power of net amounts owed " 2,449 " " 7,027 " " 5,432 " " 1,247 " " 6,375 " "Excess of increase in specific prices of inventory and property, plant, and equipment over increase in the general price level" " 20,458 " " 2,292 " " 3,853 " " 8,597 " " 3,777 " Foreign currency translation adjustment (624) (386) (454) (293) 127 Net assets at year-end (a) " 92,027 " " 67,905 " " 60,409 " " 56,966 " " 55,705 " Per share information: Income (loss) from continuing operations $3.23 $1.11 $(1.40) $(3.11) $0.84 Cash dividends declared 2 2.06 2.19 2.42 2.75 Market price at year-end 35 39 43 27 32 Average Consumer Price Index (b) 298.4 289.1 272.4 246.8 217.4 (a) "Net assets include inventory and property, plant, and equipment at current cost and all other items as they are reported in the primary financial statements. No adjustment has been made for the lower tax basis applicable to the current cost amounts included in net assets." (b) "For purposes of this Example, although the years for which information has been provided are nonspecific, the actual 1979-1983 average index numbers have been applied." ##### [255-10-55-20](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:523150281a10fda83c3cda16384728709d0359f66e370fb3e08de4f47beacba9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates one format for the five-year comparison of selected financial data. - ![](https://asc.understandingaccounting.org/asc-img/GUID-CAC3154D-6F6C-4AA4-850C-1E30A62B0B7B-low.gif) Schedule 4 FIVE-YEAR COMPARISON OF SELECTED FINANCIAL DATA "In Thousands of Dollars, Except for Per Share Amounts" "Year Ended December 31," 19X6 19X5 19X4 19X3 19X2 Total revenue As reported " $275,500 " " $239,800 " " $219,100 " " $194,800 " " $193,100 " Adjusted for general inflation (a) " 275,500 " " 247,500 " " 240,000 " " 235,500 " " 265,000 " Income (loss) from operations As reported " 22,995 " " 11,097 " " 4,756 " " 9,977 " " 11,847 " Adjusted for specific price changes (a) " 4,839 " " 1,660 " " (2,102)" " (4,663)" " 1,261 " Purchasing power gain from holding net monetary liabilities (a) " 2,449 " " 7,027 " " 5,432 " " 1,247 " " 6,375 " Excess of increase in specific price of assets over increase in the general price level (a) " 20,458 " " 2,292 " " 3,853 " " 8,597 " " 3,777 " Foreign currency translation adjustment As reported (295) (276) (396) (138) 76 Adjusted for specific price changes (a) (624) (386) (454) (293) 127 Net assets at year-end As reported " 47,700 " " 28,000 " " 20,179 " " 18,819 " " 11,980 " Adjusted for specific price changes (b) " 92,027 " " 67,905 " " 60,409 " " 56,966 " " 55,705 " Per share information: Income (loss) from operations As reported $15.33 $7.40 $3.17 $6.65 $7.90 Adjusted for specific price changes (a) 3.23 1.11 (1.40) (3.11) 0.84 Cash dividends declared As reported 2 2 2 2 2 Adjusted for general inflation (a) 2.00 2.06 2.19 2.42 2.75 Market price at year-end As reported 36 38 41 23 25 Adjusted for general inflation (a) 35 39 43 27 32 Average Consumer Price Index (c) 298.4 289.1 272.4 246.8 217.4 (a) In average 19X6 dollars. (b) "Net assets adjusted for specific price changes include inventory and property, plant, and equipment at current cost and all other items as they are reported in the primary financial statements. No adjustment has been made for the lower tax basis applicable to the current cost amounts included in net assets." (c) "For purposes of this Example, although the years for which information has been provided are nonspecific, the actual 1979-1983 average index numbers have been applied." ##### [255-10-55-21](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:318693f99cc4695cedff2b13a730566151258697e23fb5437c19bbfa4502968a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates one format for the five-year comparison of selected financial data. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B326824C-F227-48DE-9195-7EE99B5D0C23-low.gif) Schedule 5 FIVE-YEAR COMPARISON OF SELECTED FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES (a) "In Thousands of Average 19X6 Dollars, Except for Per Share Amounts" "Year Ended December 31," 19X6 19X5 19X4 19X3 19X2 Net sales and other operating revenues " $275,500 " " $247,500 " " $240,000 " " $235,500 " " $265,000 " Income (loss) from continuing operations (b) " 4,839 " " 1,660 " " (2,102)" " (4,663)" " 1,261 " Gain from decline in purchasing power of net amounts owed (c) " 2,449 " " 7,027 " " 5,432 " " 1,247 " " 6,375 " "Increase in specific prices of inventory and property, plant, and equipment (d)" " 20,458 " " 2,292 " " 3,853 " " 8,597 " " 3,777 " Foreign currency translation adjustment (e) (624) (386) (454) (293) 127 Net assets at year-end (d) " 92,027 " " 67,905 " " 60,409 " " 56,966 " " 55,705 " Per share information: Income (loss) from continuing operations $3.23 $1.11 $(1.40) $(3.11) $0.84 Cash dividends declared 2.00 2.06 2.19 2.42 2.75 Market price at year-end 35 39 43 27 32 Average Consumer Price Index (f) 298.4 289.1 272.4 246.8 217.4 (a) "The condensed financial information in this schedule presents selected information that reflects effects of changes in the specific prices (current cost) of inventory and property, plant, and equipment expressed in units of constant purchasing power. The current cost amounts for inventory and cost of goods sold reflect actual manufacturing costs incurred in 19X6. The current cost amounts for major components of property, plant, and equipment were determined by applying specific price indexes to the applicable historical costs. For assets used in U.S. operations, Producer Price Indexes and Factory Mutual Building Indexes were used; for assets used in foreign operations, appropriate indexes for each country were used. The current cost information is expressed in average 19X6 dollars as measured by the Consumer Price Index for All Urban Consumers." (b) "Income from continuing operations reported in the primary financial statements was $22,995 for 19X6. Current cost income reported in the five-year summary was only $4,839 because depreciation expense on a current cost basis exceeded depreciation expense in the primary statements by $9,748 and current cost of goods sold was $8,408 greater than the amount reported in the primary statements." (c) The purchasing power gain on net amounts owed is an economic benefit to the entity that results from being able to repay those amounts with cheaper dollars. (d) "During 19X6, the specific prices (current cost) of inventory increased by $9,108 and of property, plant, and equipment by $16,738. The total increase exceeded the increase necessary to keep pace with general inflation by $20,458. Net assets include inventory and property, plant, and equipment at current cost and all other items as reported in the primary financial statements (restated into average-for-19X6 dollars). No adjustment has been made for the lower tax basis applicable to the current cost amounts included in net assets. At December 31, 19X6, the current cost of inventory was $65,700 and of property, plant, and equipment, net of accumulated depreciation, was $89,335 (both measured in December 31, 19X6 units of purchasing power). Those amounts are higher than the amounts in the primary statements of $63,000 for inventory and $45,750 for property, plant, and equipment, net of accumulated depreciation; therefore, it is reasonable to expect income from continuing operations on a current cost basis for 19X7 to remain significantly below that reported in the primary statements." (e) "Current cost amounts for foreign operations are measured in their functional currencies, translated into dollar equivalents using the average exchange rate for the year, and restated into constant units of purchasing power using the Consumer Price Index for All Urban Consumers. Essentially, the foreign currency translation adjustment is the effect of changes in exchange rates during the year on shareholders' equity. A negative (positive) translation adjustment indicates that, overall, the dollar increased (decreased) in value relative to the functional currencies used to measure the foreign operations of the entity." (f) "For purposes of this Example, although the years for which information has been provided are nonspecific, the actual 1979-1983 average index numbers have been applied." ##### [255-10-55-22](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:0bea313cbc3a42ea39a5f9b0a6dc21fa147b137114ba81d9ac281b1852e30979 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following paragraphs 255-10-55-23 through 55-89 illustrate the methodology that might be used in calculating the disclosures in paragraph [255-10-55-14 through 55-21](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-14) . ##### [255-10-55-23](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:85aa6e5d619315bf530df55722c8e6051a2acbcc162c5109a82c74fd3c67fe85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of current cost information should be based on a detailed analysis of all transactions; however, the costs of preparing the information can be reduced with little loss of usefulness by simplifying the methods of calculation. Therefore, only cost of sales and depreciation expense need to be adjusted from the amounts shown in the primary income statement. Revenues, other expenses, and gains and losses need not be adjusted. Approximate methods of computation are acceptable for adjusting cost of sales and depreciation expense. The measurement of current cost is not illustrated. ##### [255-10-55-24](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:f683a62e1344ceba264a5b8247e4c8e7e13d1a7e301619492b2c5150c67f7e3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective in making these calculations is to obtain a reasonable degree of accuracy—complete precision is not required. Preparers are encouraged to devise short-cut methods of calculation, appropriate to their individual circumstances. ##### [255-10-55-25](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:64bb0085b411ed27265b1d780d979b7ce9d96b7724aef6e1ebf57c27d100b0b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If inventories and cost of sales are accounted for under the last-in, first-out (LIFO) method in the primary financial statements, the only adjustment normally required in computing income from continuing operations would be to eliminate the effect of changing prices on any prior-period LIFO layer liquidation. ##### [255-10-55-26](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:1308a3f5761f0af05c2d9dc62ca8a485b07ee87af1fa1909bde9a7da3d53de9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Seven basic steps to restate historical cost information into current cost-constant purchasing power information are illustrated in paragraphs [255-10-55-23 through 55-89](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-23) : 1. a Analyze inventory (at the beginning and end of the year) and cost of goods sold to determine when the costs were incurred. 2. b Restate inventory and cost of goods sold into current cost. 3. c Analyze property, plant, and equipment to determine when the related assets were acquired. 4. d Restate property, plant, and equipment and depreciation, depletion, and amortization expense into current cost. 5. e Identify the amount of net monetary items (see paragraphs [255-10-55-1 through 55-13](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-1) ) at the beginning and end of the period and changes during the period. 6. f Compute the purchasing power gain or loss on net monetary items. 7. g Compute the change in current cost of inventory and property, plant, and equipment and the related effect of the increase in the general price level. ##### [255-10-55-27](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:07021e1e64805f3fdf47f0ee8505c8d47e48e8fafc76d474ae5e842e7d6446d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The methodology illustrated in paragraphs [255-10-55-23 through 55-89](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-23) has been developed for the hypothetical entity, Parent Company. Parent Company has a wholly owned foreign subsidiary, Sub Company. Sub Company measures its operations in a functional currency other than the dollar. The changing prices disclosures for Parent Company and Sub Company are developed separately. Merging the amounts calculated for each entity results in a consolidated disclosure: 1. a Paragraphs [255-10-55-37 through 55-50](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-37) illustrate the minimum recommended calculations for the domestic operations of Parent Company. A method of checking the arithmetic accuracy of the calculations is included in paragraph [255-10-55-51](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-51). 2. b Paragraphs [255-10-55-61 through 55-74](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-61) illustrate the [translate-restate](https://asc.understandingaccounting.org/glossary/t/#translate-restate "An approach to converting current cost-nominal functional currency data of a foreign operation into units of constant purchasing power expressed in dollars. Using this approach, the current cost-nominal functional currency data are first translated into dollars and then restated into units of constant purchasing power using the Consumer Price Index for All Urban Consumers.") method for Sub Company, a foreign subsidiary that does not use the dollar as a functional currency. A method of checking the arithmetic accuracy of the calculations is included in paragraph [255-10-55-71](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-71). 3. c The results of the calculations described in (a) and (b) are summarized in paragraph [255-10-55-75](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-75) and are reflected in the illustrative disclosures in paragraphs [255-10-55-14 through 55-21](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-14) . ##### [255-10-55-28](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:6932eb3b8f0dbf1265f90f2593e761ad2b35a2793e6e23c94d8879eb10dafd90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [255-10-55-76 through 55-89](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-76) illustrate the [restate-translate](https://asc.understandingaccounting.org/glossary/r/#restate-translate "An approach to converting current cost-nominal functional currency data of a foreign operation into units of constant purchasing power expressed in dollars. Using this approach, the current cost-nominal functional currency data are restated into units of constant purchasing power using a general price index for the foreign currency. After restatement into units of constant functional currency purchasing power, the current cost data are translated into dollars. This approach often necessitates a parity adjustment.") method for Sub Company. A method of checking the arithmetic accuracy of the calculations is included in paragraphs [255-10-55-81 through 55-82](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-81) . ##### [255-10-55-29](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:966a806ddeb95a14ff677ef975df261e8d76c019e71fff6828a30513a05d3241 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Throughout this Example, $ indicates nominal dollars, C$ indicates average 19X6 constant dollars, FC indicates nominal functional currency, C$E indicates dollar equivalents of FC amounts using the translate-restate method, CFC indicates average 19X6 constant functional currency, and CFC$ indicates the translated dollar equivalents of CFC amounts using the restate-translate method. ##### [255-10-55-30](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:a75e6def4b31b6a5d87d6819918a41205c822f7bbb2801a1eb58281c9a4a8c12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Historical cost-nominal financial statements are as follows. ##### [255-10-55-31](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:b75f996efc13e37e2bbf0107296d5c4f55689124ea838743d683537201945434 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates Parent Company's balance sheet. - ![](https://asc.understandingaccounting.org/asc-img/GUID-AEAC46E5-5FC3-4F4E-BE77-2BB2B91C4713-low.gif) Parent Company Balance Sheet (Unconsolidated) "As of December 31, 19X6 and 19X5 " (000s) 19X6 19X5 19X6 19X5 Current assets: Current liabilities: Cash " $1,000 " " $2,000 " Accounts payable and accrued expenses " $47,000 " " $32,000 " Accounts receivable " 36,000 " " 16,500 " Income taxes payable " 6,000 " " 6,000 " "Inventories, at FIFO cost" " 63,000 " " 56,000 " Current portion of long-term debt " 5,000 " " 5,000 " Total current assets " 100,000 " " 74,500 " Total current liabilities " 58,000 " " 43,000 " "Property, plant, and equipment, at cost" " 100,000 " " 85,000 " Deferred income taxes " 6,000 " " 5,000 " Less accumulated depreciation " 56,000 " " 46,000 " Long-term debt " 34,000 " " 39,000 " " 44,000 " " 39,000 " Total liabilities " 98,000 " " 87,000 " Capital stock (b) " 10,000 " " 10,000 " Investment in Sub Company(a) " 1,500 " " 1,500 " Retained earnings " 37,500 " " 18,000 " " $145,500 " " $115,000 " " $145,500 " " $115,000 " (a) Investments in Sub Company is recorded at cost and is eliminated in consolidation. Parent Company does not issue separate unconsolidated statements. (b) "1,500,000 shares outstanding." ##### [255-10-55-32](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:1c534cd22390219d9d7160cdcc6238fc8b1af28a71a35d41a12231dc2b012d45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates Parent Company's statement of earnings and retained earnings. - ![](https://asc.understandingaccounting.org/asc-img/GUID-EAC7FE56-EEB9-48D5-B2A1-D5DD5EDD0148-low.gif) Parent Company (Unconsolidated) Statement of Earnings and Retained Earnings "For the Year Ended December 31, 19X6" (000s) Sales " $270,000 " "Cost of goods sold, exclusive of depreciation" " 197,000 " "Selling, general, and administrative expenses" " 10,835 " Depreciation " 10,000 " Interest " 7,165 " " 225,000 " Earnings before taxes " 45,000 " Income taxes " 22,500 " Net income " 22,500 " Retained earnings at beginning of year " 18,000 " " 40,500 " Dividends " 3,000 " Retained earnings at end of year " $37,500 " Net income per share $15 ##### [255-10-55-33](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:824e57dfd26c54f2fb21698796673569878d4ab1a564b126dde0ec7a3549a3da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Inventory and production: 1. a Inventory is accounted for on a first-in, first-out (FIFO) basis and turns over four times per year. There is no significant amount of work in progress or raw materials. 2. b At December 31, 19X6, and 19X5, inventory consisted of 900,000 units and 1,000,000 units respectively—representing production of the immediately preceding quarter. Management has measured the current cost of inventory at $73 per unit at December 31, 19X6 ($65,700,000), and $58 per unit at December 31, 19X5 ($58,000,000). 3. c Costs were incurred and goods produced as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AB6C9771-1DFA-4C80-BA82-8C9BAC52C0CA-low.gif) (000s) 19X5 19X6 4th 1st 2nd 3rd 4th Total Historical costs " $56,000 " " $39,560 " " $59,400 " " $42,040 " " $63,000 " " $204,000 " Units produced " 1,000 " 618 900 618 900 " 3,036 " Units sold " 1,000 " 618 900 618 " 3,136 " 4. d At December 31, 19X6, the selling price per unit was $85. 5. e There were no write-downs or disposals of inventory. ##### [255-10-55-34](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:8a0b000b151eeaf74239d69ee71ccd046df5c8b1794f2fc4dd23fc368cef08dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Property, plant, and equipment: 1. a Details of fixed assets at December 31, 19X6, are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-D907EA5F-B18E-486C-9380-196CA04E8765-low.gif) (000s) Date Acquired Percent Depreciated Historical Cost Accumulated Depreciation 19W9 80 " $50,000 " " $40,000 " 19X0 70 " 5,000 " " 3,500 " 19X1 60 " 5,000 " " 3,000 " 19X2 50 " 5,000 " " 2,500 " 19X3 40 " 5,000 " " 2,000 " 19X4 30 " 5,000 " " 1,500 " 19X5 20 " 10,000 " " 2,000 " 19X6 10 " 15,000 " " 1,500 " " $100,000 " " $56,000 " 2. b Depreciation is calculated at 10 percent per annum, straight line. A full year's depreciation is charged in the year of acquisition. 3. c There were no disposals. 4. d Management has measured the current cost of property, plant, and equipment at December 31, 19X6, and 19X5, as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-D0AFC5E5-1741-496A-93E1-F899B904BFD5-low.gif) (000s) "December 31, 19X6" "December 31, 19X5" Date Acquired Current Cost Accumulated Depreciation Current Cost Accumulated Depreciation 19W9 " $120,000 " " $96,000 " " $110,000 " " $77,000 " 19X0 " 10,000 " " 7,000 " " 6,000 " " 3,600 " 19X1 " 15,000 " " 9,000 " " 7,000 " " 3,500 " 19X2 " 18,000 " " 9,000 " " 12,000 " " 4,800 " 19X3 " 12,000 " " 4,800 " " 10,000 " " 3,000 " 19X4 " 17,000 " " 5,100 " " 15,000 " " 3,000 " 19X5 " 12,000 " " 2,400 " " 10,000 " " 1,000 " 19X6 " 16,000 " " 1,600 " - - " 220,000 " " $134,900 " " 170,000 " " $95,900 " Accumulated depreciation " 134,900 " " 95,900 " Net current cost " $85,100 " " $74,100 " 5. e The [recoverable amount](https://asc.understandingaccounting.org/glossary/r/#recoverable-amount "Current worth of the net amount of cash expected to be recoverable from the use or sale of an asset.") has been determined by management to be in excess of current cost, net of accumulated depreciation. ##### [255-10-55-35](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:4562d39563fa07e529b78d6ef1e8aaf0436fdbe00fa5ffac3d29293f0005cb65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Dividends were paid at the rate of $750,000 per quarter. ##### [255-10-55-36](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:dc9c8b2b9525773b4e2f6de22341464e900bc892113d9dbd1751f710f4903b01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consumer Price Index for All Urban Consumers (from the Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis, January 19X7) is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FAEA122B-47A3-4775-9E64-75BF8BF06DC1-low.gif) December 19X5 292.4 Average 19X6 298.4 December 19X6 303.5 ##### [255-10-55-37](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-37) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:82ffd47abb0ec10823a9133c462a6f69c492d39bfdf75cd744d31641e7a960e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective is to express the supplementary information in average 19X6 dollars. As indicated in paragraph [255-10-50-34](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-34), nominal dollar measurements may be used for all elements of net assets other than inventory and property, plant, and equipment. As indicated in paragraph [255-10-50-39](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-39), nominal dollar measurements may be used for all elements of income from continuing operations other than cost of sales and depreciation. ##### [255-10-55-38](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-38) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:1591966da2a022b2d8120e2875b635554f34cb6a4f9aa63a7f89e014527eafb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 1: Analysis of Inventory and Cost of Goods Sold. Inventory is assumed to turn over four times per year. Therefore, inventory with a historical cost of $63,000,000 at December 31, 19X6, is assumed to have been acquired during the fourth quarter of 19X6, and inventory with a historical cost of $56,000,000 at December 31, 19X5, is assumed to have been acquired in the fourth quarter of 19X5. ##### [255-10-55-39](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-39) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:9eb27ed5fefbcb5f3b6a905ac92f2aea9ddd3a36708282d9982d9a3f80a16e16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 2: Current Cost of Inventory and Cost of Goods Sold. Cost of goods sold, current cost is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6968189B-BC3F-4F73-9BA1-87399ABE1F5E-low.gif) Current cost at the beginning of year $58 /unit Current cost at the end of year 73 /unit $131 /unit Average current cost ($131 ÷ 2) $65.50 /unit Units sold during the year (000s) \[paragraph 255-10-55-33(c)\] "× 3,136" Average current cost of goods sold (000s) " $205,408 " ##### [255-10-55-40](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-40) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:bb744114472d1f8fb6aee9ad054483cbcb3a6a1e3d3b69e3b1a8bde16d586bfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current cost amounts should be compared with the recoverable amount. This is illustrated below. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-D452F70D-604E-44A6-A32F-400E1E490E21-low.gif) Market price per unit at end of year $85 Current cost per unit of inventory on hand at end of year 73 Excess—no write-down required $12 ##### [255-10-55-41](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-41) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:9026d317b413cff23d0fcce033d4e266f8968ed40c303a221fac29e8c816758c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 3: Analysis of Property, Plant, and Equipment and Depreciation. An analysis of property, plant, and equipment was given in paragraph [255-10-55-34](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-34). ##### [255-10-55-42](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-42) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:05dfdc2b8f26ba59738d4c6d5bf5d8496baca296b283bd53d0df113d61e764ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 4: Current Cost of Property, Plant, and Equipment and Depreciation. It will usually be appropriate to calculate current cost depreciation, depletion, and amortization expense by reference to average current cost of the related assets (current cost of assets at beginning of year + current cost of assets at end of year ÷ 2), as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-A5A14CC9-294D-4AB6-A69B-63A9D658B639-low.gif) (000s) Current Cost Current cost—12/31/X5 \[paragraph 255-10-55-34(d)\] " $170,000 " Current cost—12/31/X6 \[paragraph 255-10-55-34(d)\] " 220,000 " " 390,000 " ÷ 2 Average current cost " $195,000 " "Current cost depreciation: 10%, straight line" " $19,500 " ##### [255-10-55-43](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-43) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:081c9b15d75701189bbd9fe7f073e4ca24b85019cad9a28191b3c8d44a68b32b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, management has determined that the recoverable amount is greater than net current cost of property, plant, and equipment and there is no write-down. ##### [255-10-55-44](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-44) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:3cab5ab7a9ad76f814b7f6b150dd75b2970425083acf30837865555193a64f9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 5: Identification of Net Monetary Items. Net monetary items (see paragraphs [255-10-55-30 through 55-32](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-30) ) are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2AE49D2E-943B-4698-B443-64AA8C182DB1-low.gif) (000s) "Dec. 31, 19X6" "Dec. 31, 19X5" Cash " $1,000 " " $2,000 " Accounts receivable " 36,000 " " 16,500 " Accounts payable and accrued expenses " (47,000)" " (32,000)" Income taxes payable " (6,000)" " (6,000)" Current portion of long-term debt " (5,000)" " (5,000)" Deferred income taxes " (6,000)" " (5,000)" Long-term debt " (34,000)" " (39,000)" Net monetary liabilities " $(61,000)" " $(68,500)" ##### [255-10-55-45](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-45) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:0e9dc9c30a4ba800a887cceace272233ad3a3d21116e23ad977ed5d05169b47f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 6: Computation of the Purchasing Power Gain or Loss on Net Monetary Items. The amount of net monetary items at the beginning of the year, changes in the net monetary items, and the amount at the end of the year are restated into average 19X6 dollars. The purchasing power gain or loss on net monetary items is then the balancing item as illustrated in the following table. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FA7FBD70-20FF-4531-84A1-F8BB002C744F-low.gif) (000s) (000s) Nominal Dollars Conversion Factor Avg. 19X6 Dollars Balance—1/1/X6 " $68,500 " 298.4 (avg. 19X6) " C$ 69,906 " 292.4 (Dec.19X5) Decrease in net monetary liabilities during the year " (7,500)" (a) " (7,500)" Balance—12/31/X6 " $61,000 " 298.4 (avg. 19X6) " (59,975)" 303.5 (Dec.19X6) Purchasing power gain on net monetary items " C$ 2,431 " C$: Average 19X6 constant dollars (a) Assumed to be in average 19X6 dollars. ##### [255-10-55-46](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-46) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:2e88ee45f7dc8522cf27cd8ba0e545794c648ff4f1ccc5eb6054b8b82345d7d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Step 7: Computation of the Change in Current Cost of Inventory and Property, Plant, and Equipment and the Effect of General Price-Level Changes. The increase in current cost of inventories is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5C4BB4C8-7AC8-4289-A5A3-D38838A7A010-low.gif) (000s) (000s) Current Cost/ Nominal Dollars Conversion Factor Current Cost/ Avg. 19X6 Dollars Balance—1/1/X6 \[paragraph 255-10-55-33(b)\] " $58,000 " 298.4 (avg. 19X6) " C$ 59,190 " 292.4 (Dec. 19X5) Production \[paragraph 255-10-55-33(c)\] " 204,000 " (a) " 204,000 " Cost of goods sold \[paragraph 255-10-55-39\] " (205,408)" (a) " (205,408)" Balance—12/31/X6 \[paragraph 255-10-55-33(b)\] " (65,700)" 298.4 (avg. 19X6) " (64,596)" 303.5 (Dec. 19X6) Increase in current cost of inventories " $9,108 " " C$ 6,814 " C$: Average 19X6 constant dollars (a) Assumed to be in average 19X6 dollars. ##### [255-10-55-47](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-47) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:41367ec13e43f2a15e65bc7f1262f85d832da9f2d8e035c1d912a95d1d5b7d90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The inflation component of the increase in current cost amount is the difference between the nominal dollar and constant dollar measures. The following table uses the numbers from the preceding paragraph. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B6D1234B-FF5D-444D-A87F-2BFB0B649CB3-low.gif) (000s) Increase in current cost (nominal dollars) " $9,108 " Increase in current cost (constant dollars) " C$ 6,814 " Inflation component " 2,294 " C$: Average 19X6 constant dollars ##### [255-10-55-48](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-48) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:871c339961311a138b9c8e033789bf76886a2e585f2a540cef59b0339f5753c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increase in current cost of property, plant, and equipment is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6BC3B184-2D6B-46C3-9FDE-49BC84F7EDC2-low.gif) (000s) (000s) Current Cost/ Nominal Dollars Conversion Factor Current Cost/ Average 19X6 Dollars Balance—1/1/X6 \[paragraph 255-10-55-34(d)\] " $74,100 " 298.4 (avg. 19X6) " C$ 75,621 " 292.4 (Dec. 19X5) Additions \[paragraph 255-10-55-34(a)\] " 15,000 " (a) " 15,000 " Depreciation \[paragraph 255-10-55-42\] " (19,500)" (a) " (19,500)" Balance—12/31/X6 \[paragraph 255-10-55-34(d)\] " (85,100)" 298.4 (avg. 19X6) " (83,670)" 303.5 (Dec. 19X6) "Increase in current cost of property, plant, and equipment" " $15,500 " " C$ 12,549 " C$: Average 19X6 constant dollars (a) Assumed to be in average 19X6 dollars. ##### [255-10-55-49](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-49) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:29f8fc357e9b4f5b19684b3624b9ccbcd36cf74a9374e7e3ba2e0a078abb8508 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The inflation component of the increase in current cost amount is the difference between the nominal dollar and constant dollar measures. The following table uses the numbers from the preceding paragraph. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AE997A0C-2028-45A9-9057-896903209E37-low.gif) (000s) Increase in current cost (nominal dollars) " $15,500 " Increase in current cost (constant dollars) " C$ 12,549 " Inflation component " 2,951 " C$: Average 19X6 constant dollars ##### [255-10-55-50](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-50) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:4b18f6f0e9578c5a52f2a56e7a0514d6b0d35d48a461b95688020b06ecb520dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table summarizes paragraphs [255-10-55-47](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-47) and the preceding paragraph. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-3D711F35-E669-49CB-839F-8F348C0C50B5-low.gif) (000s) Increase in Current Cost Inflation Component Increase Net of Inflation Inventory " $9,108 " " 2,294 " " C$ 6,814 " "Property, plant, and equipment" " 15,500 " " 2,951 " " 12,549 " Total " $24,608 " " 5,245 " " C$ 19,363 " C$: Average 19X6 constant dollars ##### [255-10-55-51](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-51) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:ed8ad75b5bec313a654ce13b584e09ef46b62ed1d12bf30731755bab0d044a6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reconciliation of shareholders' equity (net assets) on a current cost - constant purchasing power basis acts as a check on the arithmetic accuracy of the calculations. Changes in shareholders' equity during 19X6 in average 19X6 dollars appear in the following table. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-1AFE89EA-A903-4F6B-9A4D-76A309F03D97-low.gif) (000s) " Source Paragraph (within 255-10-55)" Current Cost/ Average 19X6 Dollars "Equity at January 1, 19X6" Inventory 46 " C$ 59,190 " "Property, plant, and equipment—net" 48 " 75,621 " Net monetary items 45 " (69,906)" " 64,905 " Income from continuing operations 75 " 4,592 " Dividends 35 " (3,000)" Gain from decline in purchasing power of net monetary liabilities 45 " 2,431 " "Excess of increase in specific prices over increase in the general price level" Previous par. " 19,363 " " C$ 88,291 " "Equity at December 31, 19X6" Inventory 46 " C$ 64,596 " "Property, plant, and equipment—net" 48 " 83,670 " Net monetary items 45 " (59,975)" " C$ 88,291 " C$: Average 19X6 constant dollars ##### [255-10-55-52](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-52) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:656dfc8ddf563e2ce35f8b0b3a64fac444d22c2733c9052b04d4b986048508b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To facilitate the illustration of consolidated amounts in paragraph [255-10-55-75](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-75), investment in Sub Company has been excluded from net assets of Parent Company in the preceding paragraph. ##### [255-10-55-53](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-53) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:be7170a855539ed54054620bf7b57c0a141465b7d57896b7c66cdddd61e098f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The functional currency financial statements of Sub Company appear in the following tables. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2B31998D-5E0B-4922-AB6B-8D47F2222191-low.gif) Sub Company Historical Cost/Nominal FC Balance Sheets (000s) "December 31," 19X6 19X5 Cash " FC 2,550 " " FC 1,250 " Equipment " 2,500 " " 2,500 " Accumulated depreciation 750 500 Net equipment " 1,750 " " 2,000 " Total assets " FC 4,300 " " FC 3,250 " Accounts payable FC 600 FC 500 Long-term debt " 2,000 " " 1,500 " Total liabilities " 2,600 " " 2,000 " Capital stock 500 500 Retained earnings " 1,200 " 750 Total equity " 1,700 " " 1,250 " Total liabilities and equity " FC 4,300 " " FC 3,250 " FC: Nominal functional currency - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F9208358-A771-47FE-90FA-9940FFF0BC6D-low.gif) Sub Company Historical Cost/Nominal FC Statement of Income and Retained Earnings "For the Year Ended December 31, 19X6" (000s) Revenue " FC 5,000 " General and administrative expenses " 3,500 " Depreciation 250 Interest 350 " 4,100 " Income before taxes 900 Income taxes 450 Net income 450 Retained earnings—beginning of year 750 Retained earnings—end of year " FC 1,200 " FC: Nominal functional currency ##### [255-10-55-54](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-54) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:41d1eba898b2d65cfe448de7618c955648eae736f82cba2ef4628e70391ff043 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For simplicity, Sub Company is assumed to have a fixed asset but no inventory. The mechanics of restating inventory and cost of goods sold on a current cost basis are essentially the same as those illustrated for property, plant, and equipment. ##### [255-10-55-55](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-55) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:58368747605104b9572441fd72d8aa1c1634cd99d0c3280cc65e8eee25febf0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fixed asset was acquired on December 31, 19X4. It is depreciated on a straight-line basis over 10 years and is expected to have no salvage value. There were no acquisitions or disposals of assets during the year. ##### [255-10-55-56](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-56) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:70078dea7012ef30737bbd48b478a49ac54d26b36f9fa39e2497df0b5b004b73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Exchange rates between the functional currency and the dollar are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CF4947DF-81F2-4684-A765-D0278BD5FE63-low.gif) "December 31, 19X5" FC 1 = $1.20 Average 19X6 FC 1 = $1.10 "December 31, 19X6" FC 1 = $1.00 FC: Nominal functional currency ##### [255-10-55-57](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-57) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:11d3c2498a72b61b5a6e87ad617129c2b41d96fddb5eb99862f8b4ff843e6de7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Management has measured the current cost of equipment at December 31, 19X6, and 19X5, as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-86A14246-06A9-4CF2-8A47-05CECFCFAA25-low.gif) (000s) 19X6 19X5 Current cost " FC 5,500 " " FC 4,000 " Accumulated depreciation " (1,650)" (800) Net current cost " FC 3,850 " " FC 3,200 " FC: Nominal functional currency ##### [255-10-55-58](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-58) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:15f3f2435399724194163cdc1092e90ff7ad41ab67d8139403999bd41a6a0d8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recoverable amount has been determined to be in excess of net current cost at both dates. ##### [255-10-55-59](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-59) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:c3044e189964e951e5e0df7b9b294e0e25d028209205f67f91783f9c07194a1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current cost equity in nominal FC at the beginning and end of the year may be computed by adding net monetary items and net property, plant, and equipment at current cost. To determine current cost equity in nominal dollars, those FC amounts are translated at the appropriate exchange rate. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-23490AE8-E807-45CB-8FA6-96CBD4F4311A-low.gif) December 31 19X6 19X5 (000s) (000s) (000s) (000s) FC Exchange Rate $ FC Exchange Rate $ Monetary items (paragraph 255-10-55-53) Cash " FC 2,550 " $1 " $2,550 " " FC 1,250 " $1.20 " $1,500 " Current liabilities (600) $1 (600) $(500) $1.20 (600) Long-term debt " (2,000)" $1 " (2,000)" " $(1,500)" $1.20 " (1,800)" Net monetary liabilities FC (50) $(50) FC (750) $(900) Equipment—net (paragraph 255-10-55-57) " FC 3,850 " $1 " $3,850 " " FC 3,200 " $1.20 " $3,840 " Equity at current cost " FC 3,800 " " $3,800 " " FC 2,450 " " $2,940 " FC: Nominal functional currency ##### [255-10-55-60](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-60) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:9ecbc7a21889d41ce59e9de56ffa5c51b264c4abeb3b1306ff427065715a74d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The U.S. and local general price level indexes are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-3DD5984D-C980-4B32-A766-5079537A5182-low.gif) Local U.S. December 19X5 144 292.4 Average 19X6 158 298.4 December 19X6 173 303.5 ##### [255-10-55-61](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-61) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:e7b8d10f32c355153c15bdd124e4e73d50753f0e4a176a97c341cdb74f640719 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To apply the translate-restate method, amounts measured in nominal FC are first translated into their dollar equivalents. Changes in those dollar equivalent amounts are then restated to reflect the effects of U.S. inflation. ##### [255-10-55-62](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-62) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:18c73d640828fcaea406d833bac78c2a7ed93c98e868a9ff9859d3a3a8954edd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The first step is to determine current cost depreciation for the year as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-A410E70A-C9E2-4308-8AD0-B0140FA2476E-low.gif) (000s) Current cost—beginning of year (paragraph 255-10-55-57) " FC 4,000 " Current cost—end of year (paragraph 255-10-55-57) " 5,500 " " 9,500 " ÷ 2 "Average current cost, gross" " FC 4,750 " FC: Nominal functional currency ##### [255-10-55-63](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-63) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:91c6fd40cc9810ddf65f491a38cf50b4896765f4b25637d77366ca7f6f048361 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current cost depreciation expense for the year is FC 475,000 (FC 4,750,000 × 10%). Computation of current cost depreciation and income from continuing operations does not involve use of a general price level index if measurements are made in average-for-the-year currency units. Accordingly, reported current cost depreciation under the translate-restate method is C$E 523,000 (FC 475,000 x $1.10). ##### [255-10-55-64](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-64) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:02dc1862a0288133a3dedfbf5eda0b4d54a72235a1126ba53d086c17fd0d8654 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income from continuing operations on a current cost basis is computed by simply replacing historical cost depreciation in [income from continuing operations](https://asc.understandingaccounting.org/glossary/i/#income-from-continuing-operations "Income after applicable income taxes but excluding the results of discontinued operations, the cumulative effect of accounting changes, translation adjustments, purchasing power gains and losses on monetary items, and increases and decreases in the current cost or lower recoverable amount of nonmonetary assets and liabilities.") in the primary financial statements with the current cost amount. Accordingly, current cost income from continuing operations is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-E3E24D76-7E11-467A-B9F4-5F3EC533FF87-low.gif) Net income + historical cost depreciation - current cost depreciation = " FC 450,000 (paragraph 255-10-55-53) + FC 250,000 (paragraph 255-10-55-53) - FC 475,000 (paragraph 255-10-55-62)" = "FC 225,000" FC: Nominal functional currency ##### [255-10-55-65](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-65) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:d35e5cbfbc6a84e88eaccb9962bebe02a5ff4220202b2a06ccdde12f5055a5fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reported current cost income from continuing operations under the translate-restate method is C$E 247,000 (FC 225,000 × $1.10). Current cost income has been rounded down from $247,500 to $247,000. This is necessary because current cost depreciation was rounded up to $523,000 from $522,500 and current cost income is a remainder of this number. ##### [255-10-55-66](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-66) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:f2a242206829808365afa2890ad98377dd2b8903e54aa4d6a5d28537fdbc5ed6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The second step is to compute the change in the current cost of equipment and the effect of the increase in the general price level. To measure the increase in current cost of equipment in nominal FC dollar equivalents, the effect of the exchange rate change must be excluded. One way to accomplish this is to translate the December 31, 19X5, and 19X6, FC current cost amounts to dollar equivalents at the average exchange rate and then restate those dollar amounts to average 19X6 constant dollar equivalents. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-90E65DFF-3DD1-4695-BE4B-8F813A09EBBD-low.gif) (000s) (000s) (000s) Current Cost/FC Exchange Rate Current Cost/$ Conversion Factor Current Cost/C$E "Current cost, net—12/31/X5 (paragraph 255-10-55-57)" " FC 3,200 " $1.10 " $3,520 " 298.4 (avg.19X6) " C$E 3,592 " 292.4 (Dec. 19X5) Depreciation (paragraph 255-10-55-62) (475) $1.10 (523) (a) (523) "Current cost, net—12/31/X6 (paragraph 255-10-55-57)" " (3,850)" $1.10 " (4,235)" 298.4 (avg. 19X6) " (4,164)" 303.5 (Dec. 19X6) Increase in current cost " FC 1,125 " " $1,238 " " C$E 1,095 " C$E: Dollar equivalents of nominal functional currency amounts using the translate-restate method FC: Nominal functional currency (a) Assumed to be in average 19X6 C$E. ##### [255-10-55-67](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-67) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:e21e84f36113266c2afe2c43cc8aef2f13013378b47b592acc712619815932a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The inflation component of the increase in current cost amount is the difference between the nominal dollar and the constant dollar equivalent amounts, as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-C255AD41-D8F4-4249-B183-07CEF7A26D28-low.gif) (000s) Increase in current cost (nominal dollars) " $1,238 " Increase in current cost (constant dollars) " C$E 1,095 " Inflation component $143 C$E: Dollar equivalents of nominal functional currency amounts using the translate-restate method ##### [255-10-55-68](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-68) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:4c31ff80523b1718e986ba8ec334fa3d29ac31f17895acb10d66831b93056cb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The third step is to compute the purchasing power gain or loss on net monetary items. Under the translate-restate method, the translated beginning and ending net [monetary liabilities](https://asc.understandingaccounting.org/glossary/m/#monetary-liability "An obligation to pay a sum of money the amount of which is fixed or determinable without reference to future prices of specific goods and services.") are restated to average 19X6 dollars. The U.S. purchasing power gain is then the balancing amount. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-CA679C0B-748F-421D-9363-AE75FE9891A7-low.gif) (000s ) (000s) FC Exchange Rate $ Net monetary liabilities—12/31/X5 (par. 255-10-55-59) FC 750 $1.20 $900 Net monetary liabilities—12/31/X6 (par. 255-10-55-59) 50 $1.00 50 Decrease during the year FC 700 $850 FC: Nominal functional currency - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-940F9025-48F8-47E7-846C-54258D790375-low.gif) (000s) (000s) $ Conversion Factor C$E Net monetary liabilities—12/31/X5 $900 298.4 (avg. 19X6) C$E 918 292.4 (Dec. 19X5) Decrease during the year (850) (a) (850) Net monetary liabilities— 12/31/X6 $50 298.4 (avg. 19X6) (49) Purchasing power gain 303.5 (Dec. 19X6) C$E 19 C$E: Dollar equivalents of nominal functional currency amounts using the translate-restate method (a) Assumed to be in average 19X6 C$E. ##### [255-10-55-69](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-69) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:5f223ed4aecd1d395bc224817957f08d87941cfee45f070a16c918e56f6a0922 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some circumstances, this procedure will include a part of the effect of exchange rate changes on net monetary items in the purchasing power gain or loss. A more precise computation that would completely exclude the effect of exchange rate changes would be to compute a separate [purchasing power gain or loss](https://asc.understandingaccounting.org/glossary/p/#purchasing-power-gain-or-loss "The net gain or loss determined by restating in units of constant purchasing power the opening and closing balances of, and transactions in, monetary assets and liabilities.") for each functional currency operation in a manner similar to that illustrated in paragraphs [255-10-55-66 through 55-67](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-66) for the increase in specific prices. For Sub Company, that alternative method produces a purchasing power gain of C$E 18. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5553C8AA-9073-4E95-8143-5249AEA28F24-low.gif) (000s) FC Average Exchange Rate (000s) $ Conversion Factor (000s) C$E Net monetary liabilities—12/31/X5 (paragraph 255-10-55-59) FC750 $1.10 825 298.4 (avg.19X6) C$E842 292.4 (Dec. 19X5) Decrease during the year (700) $1.10 (770) (a) (770) Net monetary liabilities—12/31/X6 (paragraph 255-10-55-59) FC 50 $1.10 55 298.4 (avg. 19X6) (54) 303.5 (Dec. 19X6) Purchasing power gain C$E 18 C$E: Dollar equivalents of nominal functional currency amounts using the translate-restate method FC: Nominal functional currency (a) Assumed to be in average 19X6 C$E. ##### [255-10-55-70](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-70) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:428362478241d5f876eee2f22e51ab1335f52828315e2e61cc6016e06c88886e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The first procedure illustrated is less costly because it can be applied on a consolidated basis, and it generally provides a reasonable approximation. Accordingly, that method is acceptable. For this exercise, the more precise computation is used. ##### [255-10-55-71](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-71) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:55f8e014087e4a60064943930b07c76ee868f6dc8f155b34a258045590d9b530 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reconciliation of equity serves as a check of the calculations and is a convenient way to compute the [translation adjustment](https://asc.understandingaccounting.org/glossary/t/#translation-adjustments "Translation adjustments result from the process of translating financial statements from the entity's functional currency into the reporting currency."). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-92923652-7763-4583-893C-87A30770647B-low.gif) (000s) "Equity at 12/31/X5 in average 19X6 C$ - $2,940 (paragraph 255-10-55-59) × 298.4 ÷ 292.4" " C$ 3,000 " Income from continuing operations (paragraph 255-10-55-64 through 65) C$E 247 Purchasing power gain (paragraph 255-10-55-69) 18 Excess of increase in specific prices over increase in general price level (paragraph 255-10-55-66) " 1,095 " Translation adjustment (following paragraph) (624) Increase in equity in terms of U.S. purchasing power 736 " C$ 3,736 " "Equity at 12/31/X6 in average 19X6 C$ - $3,800 (paragraph 255-10-55-59) × 298.4 ÷ 303.5" " C$ 3,736 " C$: Average 19X6 constant dollars C$E: Dollar equivalents of nominal functional currency amounts using the translate-restate method ##### [255-10-55-72](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-72) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:7e0d2a274e7bc268b737865c1b4ac5af4bc7e89dd8c09499ab0e469b2ed93210 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The preceding paragraph shows that the translation adjustment is the amount needed to balance the reconciliation of equity. The translation adjustment may be checked by computing the effect of changes in the exchange rate on beginning-of-year equity and on the increase or decrease in equity during the year. To check the translation adjustment determined under the translate-restate method: translate the beginning- and end-of-year equity on a C$ basis into FC amounts and use those FC amounts to compute the effect on equity of changes in the exchange rate. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-62FA1792-1100-45B1-A3ED-E04B13B55613-low.gif) (000s) (000s) C$ Exchange Rate FC (000s) (000s) " C$" Exchange Rate " FC" Equity at 12/31/X5 in average 19X6 C$ (preceding paragraph) " C$ 3,000 " $0.83 (a) " FC 2,499 " Equity at 12/31/X6 in average 19X6 C$ (preceding paragraph) " 3,736 " $1.00 " 3,736 " Increase in equity C$ 736 " FC 1,237 " C$: Average 19X6 constant dollars FC: Nominal functional currency (a) FC1 - $1.20 = $0.833 - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-6DC2E5A9-38ED-49A8-B1A8-1A9CD0A000E1-low.gif) (000s) Beginning-of-year equity FC 2499 Exchange rate change during 19X6 ($1.20 - $1.00) × (.20) $(500) Increase in equity FC 1237 Difference between ending exchange rate and average rate for 19X6 ($1.10 - $1.00) × (.10) $(124) Translation adjustment $(624) FC: Nominal functional currency ##### [255-10-55-73](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-73) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:8e9cd64968e27f9093d93c075cf0efb511b88a8d468b87c22fa33226a86212ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the short-cut method for determining the purchasing power gain or loss described in paragraphs [255-10-55-68 through 55-70](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-68) were followed, the translation adjustment would be $(625). ##### [255-10-55-74](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-74) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:0fc5b8d3f1ca79c647e04725cf9c6f75894f70b295bdce38f7c0c6790112521c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Parent Company prepares its changing prices disclosures on a consolidated basis and complies with the minimum requirements in determining current cost income from continuing operations (see paragraphs [255-10-50-39 through 50-40](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-39) ). Accordingly, revenue, general and administrative expenses, interest, and income taxes (see paragraph [255-10-50-41](https://asc.understandingaccounting.org/asc/255/10/#255-10-50-41)) are shown at amounts reported in the historical cost financial statements. For Sub Company, those amounts are translated into dollars as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-02D5BB54-C155-4A74-B1A0-56CE4086867B-low.gif) (000s) (000s) "FC Amount (Paragraph 255-10-55-53)" Exchange Rate U.S. Dollars Revenue "FC 5,000" 1.10 " $5,500 " General and administrative expenses "FC 3,500" 1.10 " $3,850 " Interest FC 350 1.10 $385 Income taxes FC 450 1.10 $495 FC: Nominal functional currency ##### [255-10-55-75](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-75) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:2d3e47f5de57289efc594ad5ff82dfefe146da1e7de5f6d558a0b77e57c0f052 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The "Total" column of the following schedule provides the figures in Schedule 2 of paragraph [255-10-55-18](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-18). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-05BCEA04-A94D-45A0-94F0-786DA93C9ABD-low.gif) (000s) (000s) "Source Paragraph (within 255-10-55)" Parent Company "Source Paragraph (within 255-10-55)" Sub Company Total Average 19X6 Units of Purchasing Power Net sales and other revenues 31 " $270,000 " Preceding par. " $5,500 " " $275,500 " Cost of goods sold 39 " 205,408 " " 205,408 " Depreciation expense 42 " 19,500 " 62 through 63 523 " 20,023 " "Selling, general, and administrative expenses" 31 " 10,835 " Preceding par. " 3,850 " " 14,685 " Interest expense 31 " 7,165 " Preceding par. 385 " 7,550 " Provision for taxes 31 " 22,500 " Preceding par. 495 " 22,995 " " 265,408 " " 5,253 " " 270,661 " Income (loss) from operations " $4,592 " $247 " $4,839 " Purchasing power gain (loss) 45 " $2,431 " $18 " $2,449 " Increase in specific prices Inventory 50 " $9,108 " 69 " $9,108 " "Property, plant, and equipment" 50 " 15,500 " 66 through 67 " $1,238 " " 16,738 " " 24,608 " " 1,238 " " 25,846 " Effect of increase in general price level 50 " 5,245 " 66 through 67 143 " $5,388 " Increase in specific prices—net of inflation 50 " $19,363 " 66 through 67 " $ 1 ,095 " " $20,458 " Translation adjustment 72 $(624) $(624) Net assets 51 " $88,291 " 71 " $3,736 " " $92,027 " "December 31, 19X6 Units of Purchasing Power" Inventory 33 " $65,700 " " $65,700 " "Property, plant, and equipment—net of accumulated depreciation" 34(d) " $85,100 " 66 through 67 " $4,235 " " $89,335 " ##### [255-10-55-76](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-76) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:5a2cf7f60a3aeb4bbdf3a0761ee33c0d136717040107bb6e7d1d4033208039d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To apply the restate-translate method, the steps illustrated in paragraphs [255-10-55-61 through 55-73](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-61) are followed except that all restatements to reflect the effects of general inflation are made using the local general price level index before translation to dollar equivalents. ##### [255-10-55-77](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-77) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:2d77b2ca877df7030c7dc14e1ca1e833984d2692e002ca6bd56c109470e20d0c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current cost depreciation and income from continuing operations are FC 475,000 and FC 225,000, respectively, as determined in paragraphs [255-10-55-62 through 55-65](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-62) . ##### [255-10-55-78](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-78) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:b71d1e517a54acd95e429418b628ee2d22c8080b4842dbc8168b337b799475a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To apply the restate-translate method, the FC amount of net monetary items at the beginning of the year, changes in the net monetary items, and the amount at the end of the year are restated into average 19X6 CFC. The purchasing power gain or loss on net monetary items is then the balancing item. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-11CF5AFE-BC83-4B33-B728-83C1587F027B-low.gif) (000s) (000s) FC Conversion Factor CFC Net monetary liabilities—12/31/X5 (paragraph 255-10-55-59) FC 750 158 (avg. 19X6) CFC 823 144 (Dec. 19X5) Decrease during the year (700) (a) (700) Net monetary liabilities—12/31/X6 (paragraph 255-10-55-59) FC 50 158 (avg. 19X6) (46) 173 (Dec. 19X6) Purchasing power gain CFC 77 CFC: Average 19X6 constant functional currency C$E: Dollar equivalents of nominal functional currency amounts using the translate-restate method FC: Nominal functional currency (a) Assumed to be in average 19X6 C$E. ##### [255-10-55-79](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-79) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:613b3f727a68f996cb031c9dbf5c80e48c9e50b7642d278c4d74a0baa7d10b44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the restate-translate method, the local index is used to restate the beginning and ending current cost FC amounts into average 19X6 CFC. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-109EBCBA-794C-4A56-9722-A0C530FA8390-low.gif) (000s) (000s) Current Cost/FC Conversion Factor Current Cost/CFC Current cost net—12/31/X5 (paragraph 255-10-55-57) " FC 3,200 " 158 (avg. 19X6) " CFC 3,511 " 144 (Dec. 19X5) Depreciation (paragraph 255-10-55-77) (475) (a) (475) "Current cost, net—12/31/X6 (paragraph 255-10-55-57)" " (3,850)" 158 (avg. 19X6) " (3,516)" 173 (Dec. 19X6) Increase in current cost " FC 1,125 " CFC 480 FC: Nominal functional currency CFC: Average 19X6 constant functional currency (a) Assumed to be in average 19X6 CFC. ##### [255-10-55-80](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-80) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:186611b721f3e05cc53e0ef632ac8a9c26ea837d623f6607a65829003a909af1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The inflation component of the increase in current cost amount is the difference between the nominal functional currency and constant functional currency amounts. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-7907DCCC-ABBA-4820-9AD9-4EFC2724731E-low.gif) (000s) Increase in current cost (FC) " FC 1,125 " Increase in current cost (CFC) CFC 480 Inflation component 645 CFC: Average 19X6 constant functional currency FC: Nominal functional currency ##### [255-10-55-81](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-81) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:d9d3774479f05966ea4e45d05837d8c201b1a62c7bae909260c05c78b9ae48b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As with the translate-restate method, a reconciliation of equity acts as a check of the calculations. A reconciliation of equity also is a convenient point at which to translate the functional currency amounts determined in the preceding tables into dollar equivalents and is a convenient way to compute the translation and parity adjustments. ##### [255-10-55-82](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-82) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:3cea87f4322c2b937a6131faa9fe6353b91c3c80684f0b53ff739226bb65a7ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If beginning and ending equity are restated to average 19X6 CFC using the local index, the reconciliation of equity under the restate-translate method would be as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2EEA1FDD-5532-42F1-B44D-933D63879904-low.gif) (000s) Exchange (000s) CFC Rate CFC$ "Equity at 12/31/X5 in average 19X6 CFC (FC 2,450 \[paragraph 255-10-55-59\] × 158 ÷ 144)" " CFC 2,688 " 1.20 " CFC$ 3,226 " Income from continuing operations (paragraph 255-10-55-77) 225 1.10 247 Purchasing power gain (paragraph 255-10-55-78) 77 1.10 85 Excess of increase in specific prices over increase in general price level (paragraph 255-10-55-79) 480 1.10 528 Translation adjustment (paragraph 255-10-55-84) (616) " CFC 3,470 " " CFC$ 3,470 " "Equity at 12/31/X6 in average 19X6 CFC (FC3,800 \[paragraph 255-10-55-59\] × 158 ÷ 173)" " CFC 3,470 " 1.00 " CFC$ 3,470 " CFC: Average 19X6 constant functional currency CFC$: Translated dollar equivalents of constant functional currency amounts using the restate-translate method ##### [255-10-55-83](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-83) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:151dc7ef886d20eda89517a57ea8d4f5adef1be7cc2aa5210e3588b0c867ec71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The translation adjustment is the amount needed to balance the CFC$ reconciliation of equity. The adjustment may be computed as the sum of the following: 1. a The change in exchange rates during the period multiplied by the restated amount of net assets at the beginning of the period 2. b The difference between the average exchange rate for the period and the end-of-period exchange rate multiplied by the increase or decrease in restated net assets for the period. ##### [255-10-55-84](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-84) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:857325ba68dd011ecb509cfb9af36ac2924b7466e1fe4a34bd0f7332deaacec7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accordingly, the translation adjustment under the restate-translate method is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AC4B0517-5EB1-4DC8-8C1B-43D1036C6AF1-low.gif) (000s) Beginning-of-year equity (paragraph 255-10-55-82) " CFC 2,688 " Exchange rate change during 19X6 ($1.20 - $1.00) × (.20) $(538) "Increase in equity (3,470 - 2,688)" CFC 782 Difference between ending exchange rate and average rate for 19X6 ($1.10 - $1.00) × (.10) Translation adjustment (78) $(616) CFC: Average 19X6 constant functional currency ##### [255-10-55-85](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-85) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:87b566ae459cd17d0ad7dbe711186ee9a77de4355522f4f665d26c1a2b3244d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reconciliation of equity in paragraph [255-10-55-82](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-82), in which beginning-of-year and end-of-year equity are stated in average 19X6 CFC, is needed to calculate the translation adjustment in CFC$. However, beginning- and end-of-year equity and the increase in equity must be stated in average 19X6 constant dollars in the supplementary current cost information. ##### [255-10-55-86](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-86) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:df3f521fd5f7c080b7d09db71fac2c35b66df07e704ab905397a4c32cf0c32ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beginning and end-of-year equity in average 19X6 constant dollars are C$ 3,000,000 and C$ 3,736,000, respectively, as computed in paragraph [255-10-55-71](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-71). Thus, the overall increase in U.S. purchasing power for the year is C$ 3,736,000 - C$ 3,000,000 = C$ 736,000. However, the reconciliation of equity in paragraph [255-10-55-82](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-82) indicates that the increase in equity for the year is CFC$ 244,000 (CFC$ 3,470,000 - CFC$ 3,226,000). ##### [255-10-55-87](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-87) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:d2446cc78337d1c41fb03dd07d47edae0640a4c2695e6646d9f345bdac5a5b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The difference between C$ 736,000 and CFC$ 244,000 is the [parity adjustment](https://asc.understandingaccounting.org/glossary/p/#parity-adjustment "The effect of the difference between local and U.S. inflation for the year on net assets (that is, shareholders' equity) measured in nominal dollars. If only the differential rates of U.S. and local inflation are reflected in the exchange rates (parity), the parity adjustment and the translation adjustment net to zero. Therefore, the sum of the parity adjustment and the translation adjustment represents the effect of exchange rate changes in excess of (or less than) that needed to maintain purchasing power parity between the functional currency and the dollar.") needed to adjust the ending net investment and the increase in the net investment to measures in average 19X6 constant dollars. Accordingly, the parity adjustment is C$ 736,000 - CFC$ 244,000 = $492,000. That amount represents the sum of the following: 1. a The effect of the difference between local and U.S. inflation from December 31, 19X5, average for 19X6 on the restatement of opening equity to average units 2. b The effect of the difference between local and U.S. inflation from average for 19X6 to December 31, 19X6, the restatement of ending nominal dollar equity to average units. ##### [255-10-55-88](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-88) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:75cfc2b33b0c54dfc82b840ab838f1ff892cb7a6b3131df39c0a769058dadc03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The parity adjustment would be calculated as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-BABF1DA7-377F-4E28-9483-A2612D53ACEF-low.gif) (000s) Beginning-of-year equity (paragraph 255-10-55-59) " $2,940 " Difference between local and U.S. inflation from 12/31/X5 to average 19X6 (158 ÷ 144-298.4 ÷ 292.4) × 0.0767 $225 Equity at 12/31/X6 (paragraph 255-10-55-59) " 3,800 " Difference between local and U.S. inflation from average 19X6 to 12/31/X6 (158 ÷ 173-298.4 ÷ 303.5) × 0.0699 266 491 Rounding difference 1 Parity adjustment $492 ##### [255-10-55-89](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-89) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:26.859Z to 2026-09-09T23:18:26.859Z Record version: sha256:7327bf4e11c177b658f5c0e66119666b77cf74a4a7c273bb13965196fa01b1d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For display purposes, the parity adjustment may be combined with the $(616,000) translation adjustment (see paragraphs [255-10-55-83 through 55-84](https://asc.understandingaccounting.org/asc/255/10/#255-10-55-83) ). Accordingly, the net translation adjustment disclosed in the supplementary current cost information prepared using the restate-translate method would be $(616,000) + $492,000 = $(124,000). The components of current cost information based on the [restate-translate](https://asc.understandingaccounting.org/glossary/r/#restate-translate "An approach to converting current cost-nominal functional currency data of a foreign operation into units of constant purchasing power expressed in dollars. Using this approach, the current cost-nominal functional currency data are restated into units of constant purchasing power using a general price index for the foreign currency. After restatement into units of constant functional currency purchasing power, the current cost data are translated into dollars. This approach often necessitates a parity adjustment.") method thus would be as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-C9582CB7-02F7-477E-AF54-9E0B4BC3E0E7-low.gif) (000s) "Beginning-of-year equity—$2,940 (paragraph 255-10-55-59) × 298.4 ÷ 292.4" " C$ 3,000 " Income from continuing operations—CFC 225 (paragraph 255-10-55-77) × 1.10 CFC$ 247 Purchasing power gain—CFC 77 (paragraph 255-10-55-78 × 1.10 85 Excess of increase in specific prices over increase in general price level— CFC 480 (paragraph 255-10-55-79) × 1.10 528 Translation and parity adjustments (124) Increase in equity in terms of U.S. purchasing power 736 "End-of-year equity—$3,800 (paragraph 255-10-55-59) × 298.4 ÷ 303.5" " C$ 3,736 " C$: Average 19X6 constant dollars CFC: Average 19X6 constant functional currency CFC$: Translated dollar equivalents of constant functional currency amounts using the restate-translate method Source downloaded (UTC): 2026-09-09T23:18:30.447Z to 2026-09-09T23:18:30.447Z Record version: sha256:8bac7ed7bab5ea8caa53de5a6b2d6eee699442c675ab28a962a986a863d3eeaa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/255/10/#60-relationships) SEC content: no #### Contractors—Federal Government ##### [255-10-60-1](https://asc.understandingaccounting.org/asc/255/10/#255-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:30.447Z to 2026-09-09T23:18:30.447Z Record version: sha256:a2163276742d8fd559b7a5db3bbc9dad154bb27317c230fb0b6ed70d2908a29e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on supplementary information provided by contractors on the effects of changing prices when calculating the [purchasing power gain or loss](https://asc.understandingaccounting.org/glossary/p/#purchasing-power-gain-or-loss "The net gain or loss determined by restating in units of constant purchasing power the opening and closing balances of, and transactions in, monetary assets and liabilities.") on net monetary items, see paragraph [912-255-50-1](https://asc.understandingaccounting.org/asc/255/912/#255-912-50-1). Source downloaded (UTC): 2026-09-09T23:18:34.144Z to 2026-09-09T23:18:39.807Z Record version: sha256:d81f44cb4377b121ef09f02306d026f0337df0875074371bf3e17a83faf5ab08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-912: Changing Prices — Contractors—Federal Government ### Machine-generated study aids ```json { "summary": "ASC 255-912 tells federal government contractors how to classify certain contract-related balances when they voluntarily disclose supplementary information about the effects of changing prices under Subtopic 255-10. Its core rule is a set of monetary/nonmonetary classifications used to compute the purchasing power gain or loss on net monetary items: contract inventories and fixed-price contract advances and warranty obligations are nonmonetary, while accrued losses on contracts are monetary.", "key_points": [ "The Subtopic provides guidance to government contractors on disclosure of supplementary information about financial reporting and changing prices (255-912-05-1), and follows the scope of Section 912-10-15 (255-912-15-1).", "The guidance applies only to contractors electing to disclose supplementary changing-prices information in accordance with Subtopic 255-10 (255-912-50-1).", "Contract inventories are not monetary assets because the negotiated contract price already provides for the estimated effects of inflation during contract performance (255-912-50-1(a)).", "Advances on fixed-price contracts, though current liabilities, are nonmonetary because they represent the government's claim to nonmonetary goods or services rather than a right to receive money (255-912-50-1(b)).", "Obligations under warranties are nonmonetary because they obligate the contractor to furnish goods or services at future prices (255-912-50-1(b)).", "Accrued losses on contracts are monetary items because they are in essence future accounts payable (255-912-50-1(c))." ], "categories": [ "Presentation", "Disclosure", "Industry-specific" ], "audience_level": "advanced", "student_note": "Disclosure here is elective, not required — the Subtopic only kicks in if a contractor chooses to present changing-prices supplementary data. The common trap is assuming a current liability like a fixed-price contract advance is automatically monetary; it is nonmonetary because it is settled in goods or services, not cash.", "related_topics": [ "255-10", "912-10", "912-330", "912-405", "606" ], "key_concepts": [ "changing prices", "purchasing power gain or loss", "net monetary items", "monetary versus nonmonetary classification", "contract inventories", "contract advances", "warranty obligations", "accrued contract losses" ] } ``` Source downloaded (UTC): 2026-09-09T23:18:34.144Z to 2026-09-09T23:18:34.144Z Record version: sha256:8f9a1d3a6614af2fc008d646c62d12aa7eb294cea510f49069528436c0c51263 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-912-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/255/912/#05-overview-and-background) SEC content: no ##### [255-912-05-1](https://asc.understandingaccounting.org/asc/255/912/#255-912-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:34.144Z to 2026-09-09T23:18:34.144Z Record version: sha256:051cbaa8d2e8a36311e8094eb7313ca10fe941122a39bfc49947abd94053060f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to government contractors related to disclosure of supplementary information about financial reporting and changing prices. Source downloaded (UTC): 2026-09-09T23:18:36.295Z to 2026-09-09T23:18:36.295Z Record version: sha256:c5e98987f5faf9fc1a34a9ef64b525e41b7d323ee84feaaeab021caba0042fdb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-912-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/255/912/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [255-912-15-1](https://asc.understandingaccounting.org/asc/255/912/#255-912-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:36.295Z to 2026-09-09T23:18:36.295Z Record version: sha256:c40103de74618a1c143dd47bc8f245b5ffd5af977b1933222a576e1546ef2844 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 912-10-15. Source downloaded (UTC): 2026-09-09T23:18:39.807Z to 2026-09-09T23:18:39.807Z Record version: sha256:9419311e0349dfe145a81950aaadfc62acbec7a03460e26d3dcfd866e9252153 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 255-912-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/255/912/#50-disclosure) SEC content: no #### Financial Reporting and Changing Prices ##### [255-912-50-1](https://asc.understandingaccounting.org/asc/255/912/#255-912-50-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:39.807Z to 2026-09-09T23:18:39.807Z Record version: sha256:6a502962cc7cc5264a5344900fe83d41fd13b073576a9bca8974e72cf137dd7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For those contractors electing to disclose supplementary information on the effects of changing prices in accordance with Subtopic 255-10 all of the following matters shall be taken into consideration in calculating the purchasing power gain or loss on net monetary items: 1. a Contract inventories are not considered to be monetary assets, because the negotiated price of the contract under which the inventories are produced provides for the estimated effects of inflation during the period of contract performance. 2. b Advances related to fixed-price contracts, although considered current liabilities, shall be classified as nonmonetary items because they represent the government's claims to nonmonetary goods or services; in other words, these advances are not rights to receive money. Additionally, obligations under warranties shall be classified as nonmonetary items because they obligate the contractor to furnish goods or services at future prices. 3. c Accrued losses on contracts shall be classified as monetary items because they are, in essence, future accounts payable.