# ASC 740-830: Income Taxes — Foreign Currency Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/830/) 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): 2026-09-10T01:18:38.556Z to 2026-09-10T01:19:00.224Z Record version: sha256:be9bc96d8067bc7fde5babcccababe6a561892328ceafe96339dcfdf8d799c1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830: Income Taxes — Foreign Currency Matters ### Machine-generated study aids ```json { "summary": "This subtopic governs deferred tax accounting for basis differences that arise in foreign operations when tax or financial reporting bases are restated — because of a change in functional currency, general price-level (inflation) indexing, or a functional currency that differs from the local currency. Its core rules: when an economy ceases to be highly inflationary and new functional currency bases are established for nonmonetary items, the resulting differences from local currency tax bases are temporary differences requiring deferred taxes recognized in other comprehensive income as an adjustment to cumulative translation adjustments (830-740-45-2); by contrast, no deferred taxes are recognized for nonmonetary assets remeasured at historical exchange rates whose differences arise from exchange rate changes or tax indexing (740-10-25-3(f)).", "key_points": [ "When an economy ceases to be highly inflationary and the functional currency changes from the reporting currency to the local currency, new functional currency bases for nonmonetary items are established by translating historical reporting currency amounts at current rates, and the excess of those bases over local currency tax bases is a temporary difference for which deferred taxes must be recognized (830-740-25-2 through 25-3).", "Those deferred taxes are presented as an adjustment to the cumulative translation adjustments component of shareholders' equity and recognized in other comprehensive income (830-740-45-2).", "For price-level restated foreign financial statements using end-of-current-year purchasing power units, temporary differences equal the difference between the indexed tax basis amount and the price-level restated financial reporting amount (830-740-25-5).", "Deferred tax expense or benefit in price-level restated statements is the difference between current year-end deferred tax balances and prior year-end deferred tax balances remeasured into current purchasing power units; the remeasurement of the prior-year balances is reported as a restatement of beginning equity (830-740-30-1 through 30-2).", "The indefinite reversal criteria of Subtopic 740-30 do not apply to inside basis differences of a foreign subsidiary, so a deferred tax liability must be provided on a tax revaluation surplus that will become taxable on liquidation or distribution (830-740-25-7 through 25-8).", "No deferred tax liability or asset is recognized for differences on assets and liabilities remeasured from local currency into the functional currency at historical exchange rates that result from exchange rate changes or tax indexing (740-10-25-3(f); 830-740-25-10).", "When the reporting currency is the functional currency, remeasuring a deferred foreign tax liability or asset after an exchange rate change produces a transaction gain or loss in net income that may be presented within deferred tax expense or benefit, but it remains part of the aggregate transaction gain or loss disclosed under 830-20-45-1 (830-740-45-1)." ], "categories": [ "Income taxes", "Foreign currency", "Recognition", "Presentation" ], "audience_level": "advanced", "student_note": "Exam traps: deferred taxes arising when an economy stops being highly inflationary go to OCI/CTA, not to income tax expense; and the indefinite reversal exception of 740-30 never applies to inside basis differences such as a tax revaluation surplus. Also remember the flip side — no deferred taxes at all for nonmonetary items remeasured at historical rates under 740-10-25-3(f).", "related_topics": [ "740-10", "740-30", "830-10", "830-20", "830-30", "220-10" ], "key_concepts": [ "temporary differences", "functional currency change", "highly inflationary economy", "price-level restatement", "inside versus outside basis differences", "revaluation surplus", "cumulative translation adjustment", "historical exchange rate remeasurement" ] } ``` Source downloaded (UTC): 2026-09-10T01:18:38.556Z to 2026-09-10T01:18:38.556Z Record version: sha256:656aa93199cb5e5c220c019886bbd338f1ac1bb3b68fd36f9e220c85481e6804 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/740/830/#00-status) SEC content: no ##### [740-830-00-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:38.556Z to 2026-09-10T01:18:38.556Z Record version: sha256:a3a702360b0b2ab52665e3cf434413bb00454b455910429b86bdfddfa8e9f69d 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
Temporary DifferenceAmendedAccounting Standards Update No. 2016-1610/24/2016
830-740-25-2AmendedAccounting Standards Update No. 2020-1010/29/2020
830-740-25-4AmendedAccounting Standards Update No. 2020-1010/29/2020
830-740-25-6AmendedAccounting Standards Update No. 2020-1010/29/2020
Source downloaded (UTC): 2026-09-10T01:18:42.132Z to 2026-09-10T01:18:42.132Z Record version: sha256:844a9259bd96846427cbf48677ee9b75ffacc49481e4eb95e35de49c0e0d101f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/740/830/#05-overview-and-background) SEC content: no ##### [740-830-05-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:42.132Z to 2026-09-10T01:18:42.132Z Record version: sha256:0dc5fe88420b69a934be12a2a6894ec45a74a878ccbb32eb8680a48917a05111 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 740 addresses the majority of differences between the financial reporting (or book) basis and tax basis of assets and liabilities (basis differences). ##### [740-830-05-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:42.132Z to 2026-09-10T01:18:42.132Z Record version: sha256:af694cb82a4ac5d093d83e06946dada7e3230a2054e361737c77c8d9e533f632 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the accounting for specific types of basis differences for entities operating in foreign countries. The accounting addressed in this Subtopic is limited to the deferred tax accounting for changes in tax or financial reporting bases due to their restatement under the requirements of tax laws or generally accepted accounting principles (GAAP) in the United States. These changes arise from tax or financial reporting basis changes caused by any of the following: 1. a Changes in an entity's [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.)") 2. b Price-level related changes 3. c A [foreign entity](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity.")'s functional currency being different from its [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to."). This Subtopic addresses whether these changes, which can affect the amount of basis differences, result in recognition of changes to deferred tax assets or liabilities. Source downloaded (UTC): 2026-09-10T01:18:44.147Z to 2026-09-10T01:18:44.147Z Record version: sha256:1fb1d42b875363441294932d66dcad6f141941bba145870f7d49e00de71521c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/740/830/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [740-830-15-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:44.147Z to 2026-09-10T01:18:44.147Z Record version: sha256:1b99e5ffe44dced876e9483ef5fcff9c237db18993ccaf121c86a9cf3cc8cd9d 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 830-10-15, with specific qualifications noted below. #### Entities ##### [740-830-15-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:44.147Z to 2026-09-10T01:18:44.147Z Record version: sha256:e302898a4862f2d1beefea266d154e7098218eaed87ded9d32734b957cc4786e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities operating in foreign countries. #### Transactions ##### [740-830-15-3](https://asc.understandingaccounting.org/asc/740/830/#740-830-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:44.147Z to 2026-09-10T01:18:44.147Z Record version: sha256:97f82d107a213ae62c364fec8a6161bd96fc4c56bd1c95709740e53db26132d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to certain specified deferred tax accounting matters, specifically to the income [tax consequences](https://asc.understandingaccounting.org/glossary/t/#tax-consequences "The effects on income taxes—current or deferred—of an event.") of changes to tax or financial reporting bases from their restatements caused by: 1. a Changes in an entity's [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.)") 2. b Price-level related changes 3. c A [foreign entity](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity.")'s functional currency being different from its [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to."). Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:1d0a758f3d0aca51a988f200e3debdd1bc65838899839baf5426f21c882d2c84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/740/830/#25-recognition) SEC content: no #### Remeasurement Changes Causing Deferred Tax Recognition ##### [740-830-25-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:fa8db901f5d8af28418ff3bb468368a297023e87a66ae8034686c4e7dc8c693b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section addresses basis differences that result from remeasurement of assets and liabilities due to changes 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.)") and price levels. These remeasurement changes will often affect the amount of temporary differences for which deferred taxes are recognized. ##### [740-830-25-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:07a9254bf6343d9ae6993aee54eea21b57cb4b04784ca5daeb4a50a755e82877 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 830-10 requires that a change in functional currency from the [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements.") to the [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to.") when an economy ceases to be considered highly inflationary shall be accounted for by establishing new functional currency bases for nonmonetary items. Those bases are computed by translating the historical reporting currency amounts of nonmonetary items into the local currency at current exchange rates. ##### [740-830-25-3](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:8342defe93dc4e4f0683b6596b64f483045b27aa3be37d1dc88328f1752040b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a result of applying those requirements, the functional currency bases generally will exceed the local currency tax bases of nonmonetary items. The differences between the new functional currency bases and the tax bases represent temporary differences under Subtopic 740-10, for which deferred taxes shall be recognized. Paragraph [830-740-45-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-45-2) addresses the presentation of the effect of recognizing these deferred taxes. ##### [740-830-25-4](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:cf96da2f4e661d058689504b229f0d402baee47b5497ed072ea35ac445e946f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities located in countries with highly inflationary economies may prepare financial statements restated for general price-level changes in accordance with generally accepted accounting principles (GAAP) in the United States. The tax bases of assets and liabilities of those entities are often restated for the effects of inflation. ##### [740-830-25-5](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:2d76ed0b57a3982257f8b5ad6bb89991e48d90c961bf19f03217224f97257b85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When preparing financial statements restated for general price-level changes using end-of-current-year purchasing power units, temporary differences are determined based on the difference between the indexed tax basis amount of the asset or liability and the related price-level restated amount reported in the financial statements. Example 1 (see paragraph [830-740-55-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-55-1)) illustrates the application of this guidance. #### Inside Basis Differences within Foreign Subsidiaries That Meet the Indefinite Reversal Criterion ##### [740-830-25-6](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:fc13626c385a0bc4df3c4a9f000a041f60bbf1067c77aa353ec4cdd88e553a64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Temporary differences within an entity's foreign subsidiaries are referred to as inside basis differences. Differences between the tax basis and the financial reporting basis of an investment in a foreign subsidiary are referred to as outside basis differences. ##### [740-830-25-7](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:ef3f6ed2941badff16b6991a7aa3c5500e5efa19c94c55727c205bf9265b7489 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Inside basis differences of a foreign subsidiary of a U.S. parent where the local currency is the functional currency may result from foreign laws that provide for the occasional restatement of fixed assets for tax purposes to compensate for the effects of inflation. The amount that offsets the increase in the tax basis of fixed assets is sometimes described as a credit to revaluation surplus, which some view as a component of equity for tax purposes. That amount becomes taxable in certain situations, such as in the event of a liquidation of the foreign subsidiary or if the earnings associated with the revaluation surplus are distributed. In this situation, it is assumed that no mechanisms are available under the tax law to avoid eventual treatment of the revaluation surplus as taxable income. The indefinite reversal criteria of Subtopic 740-30 shall not be applied to inside basis differences of a foreign subsidiary, as indicated in paragraph [740-30-25-17](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-17), and a [deferred tax liability](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-liability "The deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.") shall be provided on the amount of the revaluation surplus. ##### [740-830-25-8](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:3f276883bfe853226e60e916ee8b8beb23fa0882cfc871b54583b4bc72692105 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-25-24](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-24) indicates that some temporary differences are deferred [taxable income](https://asc.understandingaccounting.org/glossary/t/#taxable-income "The excess of taxable revenues over tax deductible expenses and exemptions for the year as defined by the governmental taxing authority.") and have balances only on the income tax balance sheet. Therefore, these differences cannot be identified with a particular asset or liability for financial reporting purposes. Because the inside basis difference related to the revaluation surplus results in taxable amounts in future years based on the provisions of the foreign tax law, it qualifies as a [temporary difference](https://asc.understandingaccounting.org/glossary/t/#temporary-difference "A difference between the tax basis of an asset or liability computed pursuant to the requirements in Subtopic 740-10 for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Paragraph 740-10-25-20 cites examples of temporary differences. Some temporary differences cannot be identified with a particular asset or liability for financial reporting (see paragraphs 740-10-05-10 and 740-10-25-24740-10-25-25), but those temporary differences do meet both of the following conditions: Result from events that have been recognized in the financial statements Will result in taxable or deductible amounts in future years based on provisions of the tax law. Some events recognized in financial statements do not have tax consequences. Certain revenues are exempt from taxation and certain expenses are not deductible. Events that do not have tax consequences do not give rise to temporary differences.") even though it may be characterized as a component of equity for tax purposes. Subtopic 740-30 clearly limits the indefinite reversal criterion to the temporary differences described in paragraph [740-10-25-3(a)](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-3) and shall not be applied to analogous types of temporary differences. #### Remeasurement Changes Not Resulting in Deferred Tax Recognition ##### [740-830-25-9](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:f408f434fcfd258c8412f6033bc1957de0e372a263a07df4cc2651de46938f8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some remeasurement-caused changes in basis differences do not result in recognition of deferred taxes. ##### [740-830-25-10](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:b4a24b2129cd42c34bea1e566790100bad4984abc52a46358cd59021fd7b491e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [740-10-25-3(f)](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-3), recognition is prohibited for a deferred tax liability or asset for differences related to assets and liabilities that, under the requirements of Subtopic 830-10, are remeasured from the local currency into the functional currency using historical exchange rates and that result from changes in exchange rates or indexing for tax purposes. ##### [740-830-25-11](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:51.457Z to 2026-09-10T01:18:51.457Z Record version: sha256:091d0f3ac52c2039cbf71f6779999510ac3280b3b8e710819425eaec080e0d1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [830-10-45-16](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-16) provides additional guidance on accounting for the eventual recognition of indexing related deferred tax benefits after an entity's functional currency changes from 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.") to the reporting currency because the foreign economy becomes highly inflationary. Source downloaded (UTC): 2026-09-10T01:18:54.305Z to 2026-09-10T01:18:54.305Z Record version: sha256:1a1157b9ddfa668ac48582cf283a6f9b1a8c1374e05b525fc14908278126c8ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/740/830/#30-initial-measurement) SEC content: no #### Foreign Financial Statements Restated for General Price Level Changes ##### [740-830-30-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:54.305Z to 2026-09-10T01:18:54.305Z Record version: sha256:2e5f5c735147b72d6c078f39c2ac190f72c765ecf7aacf5d1c0f16c157b2d25b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In foreign financial statements that are restated for general price-level changes, the deferred tax expense or [benefit](https://asc.understandingaccounting.org/glossary/b/#benefit "See Tax (or Benefit).") shall be calculated as the difference between the following two measures: 1. a Deferred tax assets and liabilities reported at the end of the current year, determined in accordance with paragraph [830-740-25-5](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-5) 2. b Deferred tax assets and liabilities reported at the end of the prior year, remeasured to units of current general purchasing power at the end of the current year. ##### [740-830-30-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:54.305Z to 2026-09-10T01:18:54.305Z Record version: sha256:d1343a61613de5e363670964b565bed96453ccca340070f4eccc91f3740e0fd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remeasurement of deferred tax assets and liabilities at the end of the prior year is reported together with the remeasurement of all other assets and liabilities as a restatement of beginning equity. ##### [740-830-30-3](https://asc.understandingaccounting.org/asc/740/830/#740-830-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:54.305Z to 2026-09-10T01:18:54.305Z Record version: sha256:3afa2d3c603128d9a839cba88e730435665345e873f7da09207d6ec2bdff6ffe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [830-740-55-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-55-1)) illustrates the application of this guidance. Source downloaded (UTC): 2026-09-10T01:18:57.756Z to 2026-09-10T01:18:57.756Z Record version: sha256:514af840227ae679f8faa7f6468de76291c06bdd91ce832c989def8ccfb050d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/740/830/#45-other-presentation-matters) SEC content: no ##### [740-830-45-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:57.756Z to 2026-09-10T01:18:57.756Z Record version: sha256:006e7db410fd86dd2bdaae833d76de5f0d2033e4d8c20937fe8c044d38f583fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:57.756Z to 2026-09-10T01:18:57.756Z Record version: sha256:10558eb42b168a04a21062f6ecb913f044da56bd7de9fd83213923dd32d6902e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:19:00.224Z to 2026-09-10T01:19:00.224Z Record version: sha256:5d4c513da1c7c968d35b26246b8963cf54af66e61e86acf07e90277fae2309fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-830-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/740/830/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [740-830-55-1](https://asc.understandingaccounting.org/asc/740/830/#740-830-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:00.224Z to 2026-09-10T01:19:00.224Z Record version: sha256:a1bbbb336c9e12727037382c54df4b8434601ec7540dfba4f34b1c69ae12843e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [830-740-25-5](https://asc.understandingaccounting.org/asc/740/830/#740-830-25-5) and [830-740-30-1 through 30-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-30-1) .An entity has one asset, a nonmonetary asset that is not depreciated for financial reporting or tax purposes. The [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to.") is FC. Units of current purchasing power are referred to as CFC. The enacted tax rate is 40 percent. The asset had a price-level-adjusted financial reporting amount of CFC 350 and an indexed basis for tax purposes of CFC 100 at December 31, 19X2, both measured using CFC at December 31, 19X2. The entity has a [taxable temporary difference](https://asc.understandingaccounting.org/glossary/t/#taxable-temporary-difference "Temporary differences that result in taxable amounts in future years when the related asset is recovered or the related liability is settled. See Temporary Difference.") of CFC 250 (CFC 350 - CFC 100) and a related [deferred tax liability](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-liability "The deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.") of CFC 100 (CFC 250 x 40 percent) using CFC at December 31, 19X2. ##### [740-830-55-2](https://asc.understandingaccounting.org/asc/740/830/#740-830-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:00.224Z to 2026-09-10T01:19:00.224Z Record version: sha256:6fa0cfa1c8b8df08a0f9309a18b997a2fe4561e6c30b733e38dd44a3193a9318 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. General price levels increase by 50 percent in 19X3, and indexing allowed for 19X3 for tax purposes is 25 percent. At December 31, 19X3, the asset has a price-level-adjusted financial reporting amount of CFC 525 (CFC 350 x 150 percent) and an indexed basis for tax purposes of CFC 125 (CFC 100 x 125 percent), using CFC at December 31, 19X3. The entity has a taxable temporary difference of CFC 400 (CFC 525 - CFC 125) and a related deferred tax liability of CFC 160 (CFC 400 x 40 percent) at December 31, 19X3, using CFC at December 31, 19X3. The deferred tax liability at December 31, 19X2 is restated to units of current general purchasing power as of December 31, 19X3. The restated December 31, 19X2 deferred tax liability is CFC 150 (CFC 100 x 150 percent). For 19X3, the difference between CFC 160 and CFC 150 is reported as deferred tax expense in income from continuing operations. The difference between the deferred tax liability of CFC 100 at December 31, 19X2 and the restated December 31, 19X2 deferred tax liability of CFC 150 is reported in 19X3 as a restatement of beginning equity. ##### [740-830-55-3](https://asc.understandingaccounting.org/asc/740/830/#740-830-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:00.224Z to 2026-09-10T01:19:00.224Z Record version: sha256:73665f4355aedb7828885650bdd53c03507eb24b6d6ca28d512ede8ebcd95173 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is a tabular presentation of this Example. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9AE72C41-0D66-47FA-8021-F426BEBDF9C2-low.gif) 19X2 19X3 Financial reporting basis CFC 350 × 1.5 CFC 525 Tax basis CFC 100 × 1.25 CFC 125 Temporary difference CFC 250 CFC 400 Tax rate × .40 ×.40 "Deferred tax liability, end of year" CFC 100 CFC 160 "Deferred tax liability (restated), beginning of year" CFC 100 × 1.5 CFC 150 Deferred tax expense CFC 10