# ASC 740-830-45: Income Taxes — Foreign Currency Matters — 45 Other Presentation Matters

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/740/830/#45-other-presentation-matters)

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## ASC 740-830-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/740/830/#45-other-presentation-matters)

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##### [740-830-45-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-45-1)

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As indicated in paragraph [830-20-45-3](https://asc.understandingaccounting.org/asc/830/20/#830-20-45-3), when the [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements.") (not the [foreign currency](https://asc.understandingaccounting.org/glossary/f/#foreign-currency "A currency other than the functional currency of the entity being referred to (for example, the dollar could be a foreign currency for a foreign entity). Composites of currencies, such as the Special Drawing Rights, used to set prices or denominate amounts of loans, and so forth, have the characteristics of foreign currency.")) is the functional currency, remeasurement of an entity's deferred foreign tax liability or asset after a change in the [exchange rate](https://asc.understandingaccounting.org/glossary/e/#exchange-rate "The ratio between a unit of one currency and the amount of another currency for which that unit can be exchanged at a particular time.") will result in a [transaction gain or loss](https://asc.understandingaccounting.org/glossary/t/#transaction-gain-or-loss "Transaction gains or losses result from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated. They represent an increase or decrease in both of the following: The actual functional currency cash flows realized upon settlement of foreign currency transactions The expected functional currency cash flows on unsettled foreign currency transactions.") that is recognized currently in determining net income. Paragraph [830-20-45-1](https://asc.understandingaccounting.org/asc/830/20/#830-20-45-1) requires disclosure of the aggregate transaction gain or loss included in determining net income but does not specify how to display that transaction gain or loss or its components for financial reporting. Accordingly, a transaction gain or loss that results from remeasuring a deferred foreign tax liability or asset may be included in the reported amount of deferred tax [benefit](https://asc.understandingaccounting.org/glossary/b/#benefit "See Tax (or Benefit).") or expense if that presentation is considered to be more useful. If reported in that manner, that transaction gain or loss is still included in the aggregate transaction gain or loss for the period to be disclosed as required by that paragraph.

##### [740-830-45-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-45-2)

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The deferred taxes associated with the temporary differences that arise from a change in [functional currency](https://asc.understandingaccounting.org/glossary/f/#functional-currency "An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash. (See paragraphs 830-10-45-2830-10-45-3830-10-45-4830-10-45-5830-10-45-6 and 830-10-55-3830-10-55-4830-10-55-5830-10-55-6830-10-55-7.)") discussed in paragraph [830-740-25-3](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-3) when an economy ceases to be considered highly inflationary shall be presented as an adjustment to the cumulative [translation adjustments](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.") component of shareholders' equity and therefore shall be recognized in other comprehensive income.