# ASC 830-10-10: Foreign Currency Matters — Overall — 10 Objectives

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/830/10/#10-objectives)

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## ASC 830-10-10: 10 Objectives

[Read section](https://asc.understandingaccounting.org/asc/830/10/#10-objectives)

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#### Objectives of Translation

##### [830-10-10-1](https://asc.understandingaccounting.org/asc/830/10/#830-10-10-1)

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Financial statements are intended to present information in financial terms about the performance, financial position, and cash flows of a [reporting entity](https://asc.understandingaccounting.org/glossary/r/#reporting-entity "An entity or group whose financial statements are being referred to. Those financial statements reflect any of the following: The financial statements of one or more foreign operations by combination, consolidation, or equity accounting Foreign currency transactions."). For this purpose, the financial statements of separate entities within a reporting entity, which may exist and operate in different economic and currency environments, are consolidated and presented as though they were the financial statements of a single reporting entity. Because it is not possible to combine, add, or subtract measurements expressed in different currencies, it is necessary to translate into a single [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements.") those assets, liabilities, revenues, expenses, gains, and losses that are measured or denominated in a [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."). Paragraph [830-10-55-1](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-1) discusses the meaning of measurement in a foreign currency.

##### [830-10-10-2](https://asc.understandingaccounting.org/asc/830/10/#830-10-10-2)

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The unity presented by such [translation](https://asc.understandingaccounting.org/glossary/t/#translation "See Foreign Currency Translation.") does not alter the underlying significance of the results and relationships of the constituent parts of the reporting entity. It is only through the effective operation of its constituent parts that the reporting entity as a whole is able to achieve its purpose. Accordingly, the translation of the financial statements of each component entity of a reporting entity should accomplish both of the following objectives:

1.  a
    
    Provide information that is generally compatible with the expected economic effects of a rate change on a reporting entity's cash flows and equity
    
2.  b
    
    Reflect in consolidated statements the financial results and relationships of the individual consolidated entities as measured in their functional currencies in conformity with U.S. generally accepted accounting principles (GAAP).